← Search

Journal of Financial Economics Vol. 78 No. 1 2005

Crossborder dividend taxation and the preferences of taxable and nontaxable investors: Evidence from Canada

S CHRISTOFFERSEN1,2; C GECZY; David K. Musto3; Adam V. Reed4

1 McGill University · 2 Center for Interuniversity Research and Analysis on Organizations · 3 University of Pennsylvania · 4 University of North Carolina at Chapel Hill

open access

Abstract

We consider how fund managers respond to the conflicting preferences of their investors. We focus on the conflict between the taxable and retirement accounts of international funds, which face different tradeoffs between dividends and capital gains. In principle, managers could resolve this conflict through dividend arbitrage, but a proprietary database of dividend-arbitrage transactions shows that in practice they cannot. Thus, managers must resolve it through their investment policies. We find robust evidence that managers with more retirement money favor the preferences of retirement investors and further evidence for this view in the difference between U.S. and Canadian funds’ portfolio weights.

DOI
10.1016/j.jfineco.2004.08.004
Volume
78
Issue
1
Pages
121-144
Language
en
Sources
bibtex:phds-export.bib openalex crossref

Cite