An Empirical Examination of Tax Factors and Mutual Funds' Stock Sales Decisions

An Empirical Examination of Tax Factors and Mutual Funds' Stock Sales Decisions We examine whether taxes affect stock sales by mutual funds. For certain funds, the expected amount of a given stock sold in a given quarter is 62% greater when liquidation would trigger a capital loss equal to 1% of the value of the portfolio than when a like-size gain would be triggered, a greater effect than is associated with either contemporaneous excess stock returns of 50% or unexpected EPS equal to 50% of the stock price. For growth funds, responses to tax factors are consistent from year to year, and dispositions vary with the year-to-date realized gain. Review of Accounting Studies Springer Journals

An Empirical Examination of Tax Factors and Mutual Funds' Stock Sales Decisions

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Kluwer Academic Publishers
Copyright © 2002 by Kluwer Academic Publishers
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
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