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

Steven Huddart () and V. G. Narayanan

Review of Accounting Studies, 2002, vol. 7, issue 2, No 14, 319-341

Abstract: 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 (search for similar items in EconPapers)
Date: 2002
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DOI: 10.1023/A:1020250708495

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