Capital gains lock-in and governance choices
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 likeli...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2019
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/105243 http://hdl.handle.net/10220/50312 |
| _version_ | 1826127499078139904 |
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| author | Dimmock, Stephen Geoffrey Gerken, William C. Ivković, Zoran Weisbenner, Scott J. |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Dimmock, Stephen Geoffrey Gerken, William C. Ivković, Zoran Weisbenner, Scott J. |
| author_sort | Dimmock, Stephen Geoffrey |
| collection | NTU |
| description | 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. |
| first_indexed | 2024-10-01T07:09:53Z |
| format | Journal Article |
| id | ntu-10356/105243 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T07:09:53Z |
| publishDate | 2019 |
| record_format | dspace |
| spelling | ntu-10356/1052432023-05-19T06:44:43Z Capital gains lock-in and governance choices Dimmock, Stephen Geoffrey Gerken, William C. Ivković, Zoran Weisbenner, Scott J. Nanyang Business School Business::Finance Mutual Fund Proxy Voting 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. Accepted version 2019-11-01T02:21:48Z 2019-12-06T21:47:52Z 2019-11-01T02:21:48Z 2019-12-06T21:47:52Z 2017 Journal Article 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 0304-405X https://hdl.handle.net/10356/105243 http://hdl.handle.net/10220/50312 10.1016/j.jfineco.2017.11.001 en Journal of Financial Economics © 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. 57 p. application/pdf |
| spellingShingle | Business::Finance Mutual Fund Proxy Voting Dimmock, Stephen Geoffrey Gerken, William C. Ivković, Zoran Weisbenner, Scott J. Capital gains lock-in and governance choices |
| title | Capital gains lock-in and governance choices |
| title_full | Capital gains lock-in and governance choices |
| title_fullStr | Capital gains lock-in and governance choices |
| title_full_unstemmed | Capital gains lock-in and governance choices |
| title_short | Capital gains lock-in and governance choices |
| title_sort | capital gains lock in and governance choices |
| topic | Business::Finance Mutual Fund Proxy Voting |
| url | https://hdl.handle.net/10356/105243 http://hdl.handle.net/10220/50312 |
| work_keys_str_mv | AT dimmockstephengeoffrey capitalgainslockinandgovernancechoices AT gerkenwilliamc capitalgainslockinandgovernancechoices AT ivkoviczoran capitalgainslockinandgovernancechoices AT weisbennerscottj capitalgainslockinandgovernancechoices |