Journal of Finance Vol. 53 No. 5 1998
Capital Gains Taxation and Stock Market Activity: Evidence from IPOs
Abstract
Prior to the Tax Reform Act of 1986 (TRA '86), long-term capital gains were taxed at a lower rate than short-term gains, presenting investors with an opportunity to increase their after-tax return by delaying the sale of appreciated assets until after they qualified for long-term status and selling depreciated assets prior to long-term qualification. Using a sample of Initial Public Offerings, I find that stocks that appreciated prior to long-term qualification exhibit increased volume and decreased returns just after their qualification date, while stocks that depreciated prior to long-term qualification exhibit these effects just prior to their qualification date.
- DOI
- https://doi-org.proxy.lib.uiowa.edu/10.1111/0022-1082.00073
- Volume
- 53
- Issue
- 5
- Pages
- 1799-1819
- Sources
- bibtex:phds-export.bib