Corporate Taxes, Leverage, and Investment: Evidence from Nazi-Occupied Netherlands
Principal Investigator(s): View help for Principal Investigator(s) Philip T. Fliers, Queen's University Belfast; Abe de Jong, Monash University & University of Groningen; Bert S. van Stiphout-Kramer, CPB
Version: View help for Version V3
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application/zip | 4.8 MB | 01/18/2024 09:36:PM |
Project Citation:
Fliers, Philip T., de Jong, Abe, and van Stiphout-Kramer, Bert S. Corporate Taxes, Leverage, and Investment: Evidence from Nazi-Occupied Netherlands. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2024-01-19. https://doi.org/10.3886/E197541V3
Project Description
Summary:
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This data deposit provides the data and replication files for Fliers et al. (2024, forthcoming in The Economic History Review).
We examine the Netherlands around the Second World War, where the occupying Nazi regime overhauled the country’s corporate tax regime and introduced a profit tax of 55 percent. We estimate that the new tax regime cost investors at least 300 million guilders, an amount equivalent to five percent of Dutch GDP in 1940. We demonstrate that the tax introduction changed the financing of Dutch businesses. In particular, we find strong evidence that debt financing increased because it provides a tax shelter. The changes in taxation also led to an after-tax reduction in the cost of debt, which had large real effects on firm investment: after the end of the war, firms with more leverage had higher capital expenditures.
We examine the Netherlands around the Second World War, where the occupying Nazi regime overhauled the country’s corporate tax regime and introduced a profit tax of 55 percent. We estimate that the new tax regime cost investors at least 300 million guilders, an amount equivalent to five percent of Dutch GDP in 1940. We demonstrate that the tax introduction changed the financing of Dutch businesses. In particular, we find strong evidence that debt financing increased because it provides a tax shelter. The changes in taxation also led to an after-tax reduction in the cost of debt, which had large real effects on firm investment: after the end of the war, firms with more leverage had higher capital expenditures.
Scope of Project
Subject Terms:
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economic history
Geographic Coverage:
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Netherlands
Time Period(s):
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1938 – 1948
Universe:
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Exchange listed firms in the Netherlands between 1938 and 1948
Data Type(s):
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observational data
Methodology
Response Rate:
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Not applicable
Sampling:
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Not applicable
Data Source:
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Financieel Jaarboek, De Nederlandsche Financier (1912–1944, annual issues).
Gids bij de Prijscourant van de Vereeniging voor den Effectenhandel, (1890–1982, annual issues).
Jaarcijfers voor Nederland 1943-1946, Centraal Bureau voor de Statistiek (1948).
Statistisch zakboek, Centraal Bureau voor de Statistiek (1924–1988, annual editions).
Tabellen van laagste en hoogste koersen en dividenden over de jaren 1939 tot en met 1949 met tal van aantekeningen, Hendrik Sijthoff’s Financieele Bladen (1949).
Van Nierop en Baak’s Naamlooze Vennootschappen, (Zwolle, 1882–1946, annual issues).
Van Oss’ Effectenboek, (Groningen, 1903–1978, annual issues).
Gids bij de Prijscourant van de Vereeniging voor den Effectenhandel, (1890–1982, annual issues).
Jaarcijfers voor Nederland 1943-1946, Centraal Bureau voor de Statistiek (1948).
Statistisch zakboek, Centraal Bureau voor de Statistiek (1924–1988, annual editions).
Tabellen van laagste en hoogste koersen en dividenden over de jaren 1939 tot en met 1949 met tal van aantekeningen, Hendrik Sijthoff’s Financieele Bladen (1949).
Van Nierop en Baak’s Naamlooze Vennootschappen, (Zwolle, 1882–1946, annual issues).
Van Oss’ Effectenboek, (Groningen, 1903–1978, annual issues).
Scales:
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Not applicable
Weights:
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Not applicable
Unit(s) of Observation:
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Firm
Geographic Unit:
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National
Related Publications
Published Versions
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