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Title: Capital gains lock-in and governance choices
Authors: Dimmock, Stephen Geoffrey
Gerken, William C.
Ivković, Zoran
Weisbenner, Scott J.
Keywords: Business::Finance
Mutual Fund
Proxy Voting
Issue Date: 2017
Source: Dimmock, S. G., Gerken, W. C., Ivković, Z., & Weisbenner, S. J. (2018). Capital gains lock-in and governance choices. Journal of Financial Economics, 127(1), 113-135. doi:10.1016/j.jfineco.2017.11.001
Series/Report no.: Journal of Financial Economics
Abstract: Differences in accrued gains and investors’ tax-sensitivity induce variation in a capital gains lock-in effect across mutual funds even for the same stock at the same time. Exploiting this variation, we show this effect influences funds’ governance decisions: higher capital gains decrease the likelihood a fund exits prior to contentious votes and increase the likelihood a fund votes against management. Consistent with tax motivation, these findings are concentrated among funds with tax-sensitive investors. Further, high aggregate capital gains across funds holding a stock predict a higher likelihood management loses a vote and a lower likelihood a contentious vote is proposed.
ISSN: 0304-405X
DOI: 10.1016/j.jfineco.2017.11.001
Rights: © 2017 Elsevier B.V. All rights reserved. This paper was published in Journal of Financial Economics and is made available with permission of Elsevier B.V.
Fulltext Permission: open
Fulltext Availability: With Fulltext
Appears in Collections:NBS Journal Articles

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