• 1 Introduction<br<2 The Model
  • 2.1 Assumptions
  • 2.2 Capital gains taxes and the lock-in effect
  • 2.3 Private valuations vs. market prices
  • 3 The Firm’s Capital Budgeting Problem
  • 4 Personal Taxes, Investment, and Financing
  • 4.1 Distortions in investment policy
  • 4.2 The trade-off theory with personal taxes
  • 4.3 Capital gains taxes and the timing of default
  • 4.4 The relevance of personal taxes to capital budgeting
  • 4.5 Managerial discretion and capital gains taxes
  • 4.6 The effects of trading frictions
  • 5 Empirical Analysis
  • 5.1 Data and sample construction
  • 5.2 Proxies for investors’ tax basis
  • 5.3 Do personal taxes affect corporate investment?
  • 5.4 Proxies for tax sensitive stock ownership
  • 5.5 Do personal taxes affect external financing?
  • 5.6 Managerial shareholdings and firms’ policy choices
  • 6 Conclusion
  • Appendix
  • References