@article{44a75437fd434fa49503c5acd7d067ac,
title = "Open-end mutual funds and capital-gains taxes",
abstract = "Despite the fact that taxable investors would prefer to defer the realization of capital gains indefinitely, most open-end mutual funds regularly realize and distribute a large portion of their gains. We present a model in which unrealized gains in the fund's portfolio increase expected future taxable distributions, and thus increase the present value of a new investor's tax liability. In equilibrium, managers interested in attracting new investors pass through taxable capital gains to reduce the overhang of unrealized gains. This model contains a number of empirical predictions that are consistent with data on actual fund overhangs.",
keywords = "Capital-gains taxes, G23, Mutual funds",
author = "Barclay, {Michael J.} and Pearson, {Neil D.} and Weisbach, {Michael S.}",
note = "Funding Information: We would like to thank Morningstar, Inc., for providing the data used in this paper, and Jim Brickley, Andrew Christie, Bruce Hansen, Ludger Hentschel, Jeff Pontiff, Jim Poterba, Peter Tufano, David Weisbach, and seminar participants at the University of Alberta, University of Arizona, Boston College, University of Chicago, University of Illinois, University of California at Irvine, University of Michigan, NBER, University of North Carolina, Penn State University, Princeton University, University of Rochester, University of Southern California, and the Wharton School of the University of Pennsylvania for helpful comments. The Bradley Center for Policy Research, NSF Grant SBR-9616675, and the Q-Group provided financial assistance. Copyright: Copyright 2020 Elsevier B.V., All rights reserved.",
year = "1998",
month = jul,
day = "1",
doi = "10.1016/s0304-405x(98)00016-6",
language = "English (US)",
volume = "49",
pages = "3--43",
journal = "Journal of Financial Economics",
issn = "0304-405X",
publisher = "Elsevier B.V.",
number = "1",
}