NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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William C. Gerken

Gatton College of Business and Economics
550 S. Limestone
Lexington, KY 40526

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: University of Kentucky

NBER Working Papers and Publications

May 2014Capital Gains Lock-In and Governance Choices
with Stephen G. Dimmock, Zoran Ivković, Scott J. Weisbenner: w20176
Because of differences in accrued gains and investors' tax-sensitivity, capital gains "lock-in" varies across mutual funds even for the same stock at the same time. Using this variation, we show that tax lock-in affects funds' governance decisions. Higher tax lock-in decreases the likelihood a fund sells a stock prior to contentious votes, and increases the likelihood the fund votes against management. Consistent with tax motivations, these findings are concentrated among funds with tax-sensitive investors. High aggregate capital gains across funds holding a stock predicts a higher likelihood management loses a vote and a lower likelihood a contentious vote is proposed.

Published: Stephen G. Dimmock & William C. Gerken & Zoran Ivković & Scott J. Weisbenner, 2018. "Capital gains lock-in and governance choices," Journal of Financial Economics, vol 127(1), pages 113-135. citation courtesy of

 
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