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

52 Pages Posted: 21 Jan 2002

See all articles by Steven J. Huddart

Steven J. Huddart

Pennsylvania State University, University Park - Department of Accounting

V. G. Narayanan

Harvard University - Accounting & Control Unit

Multiple version iconThere are 3 versions of this paper

Abstract

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.

Keywords: Investment advisers; Overhang; Realized; Unrealized

JEL Classification: H20, G23

Suggested Citation

Huddart, Steven J. and Narayanan, V. G., An Empirical Examination of Tax Factors and Mutual Funds' Stock Sales Decisions. Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=296420 or http://dx.doi.org/10.2139/ssrn.296420

Steven J. Huddart (Contact Author)

Pennsylvania State University, University Park - Department of Accounting ( email )

University Park, PA 16802-3603
United States
814-863-0448 (Phone)

HOME PAGE: http://directory.smeal.psu.edu/sjh11

V. G. Narayanan

Harvard University - Accounting & Control Unit ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-6359 (Phone)
617-496-7363 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
313
Abstract Views
2,681
rank
116,631
PlumX Metrics