Capital Gains Lock-In and Governance Choices / Stephen G. Dimmock, William C. Gerken, Zoran Ivković, Scott J. Weisbenner.

Format:

Book

Author/Creator:

Dimmock, Stephen G.

Contributor:

National Bureau of Economic Research.

Gerken, William C.

Ivković, Zoran.

Weisbenner, Scott J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20176.

NBER working paper series no. w20176

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

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.

Notes:

Print version record

May 2014.