Some countries where cross ownership of shares is a major part of the business culture are:
Positives of cross ownership:
Cross ownership of shares is critized for:
A major factor in perpetuating cross ownership of shares is a high capital gains[?] tax rate. A company has less incentive to sell cross owned shares if taxes are high because of the immediate reduction in the value of the assets.
For example, a company owns $1000 of stock in another company that was originally purchased for $200. If the capital gains tax rate is 50% (like Germany) and the company sells the stock, the company has $600 which is 40 percent less than before it sold the stock.
Long term cross ownership of shares combined with a high capital tax rate greatly increases periods of asset deflation both in time and in severity.
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