Although using dividends as a proxy for equity ownership has a long history in the public finance literature, 11 there are two reasons why this proxy is im- perfect. First, dividend income as reported on a tax return includes payouts from any mutual fund, even if the fund is exclusively invested in fixed-income assets. Second, whereas dividends will capture equity ownership for those who invest in dividend-paying firms, it may miss those who invest primarily in non-dividend paying firms such as technology firms, a sector that became in- creasingly important during the 1990s. The potential for both type-1 and type-2 errors in defining equity ownership prompts the question whether.
