THE EFFECTS OF TAXES, REGULATION, EARNINGS, AND ORGANIZATIONAL FORM ON LIFE INSURERS INVESTMENT PORTFOLIO REALIZATIONS

We exploit a unique experimental setting within the life insurance ind ustry to examine the effects of taxes, regulation, earnings, and organ izational form on life insurers' investment portfolio realizations. A unique equity tax levied on mutual life insurers, as well as the statu tory rate variation that occurred during our sample period, allow us t o disentangle the effects of taxes from earnings or profitability. Con sistent with some policymakers' claims, we find mutual insurers' capit al gain realizations are affected by company-specific equity tax rate variation. In addition, we find capital regulation and earnings consid erations affect both stocks' and mutuals' realizations. (C) 1997 Elsev ier Science B.V. All rights reserved.