Do Holding Period Tax Incentives Affect Earnings Release Period Selling Activity of Individual Investors?

This study examines the effect of tax-rate-based holding period incentives on individual investors' earnings release period selling decisions using selling activity proxies computed from intra-day transaction data. We find evidence that earnings release period selling activity, for a given level of past stock price appreciation (depreciation), is lower (higher) when the magnitude of the tax-rate incentive to hold long term is larger. The results are, however, sensitive to the time period used to compute the past stock price change variable. Although we report results consistent with income tax considerations influencing individual investors' selling decisions, the results cannot be definitively attributed to holding period incentives.

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Long-Term Capital Gains Tax Strategies: Correlated Protective Put Strategy

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v2i8.2909 ◽

2011 ◽

Vol 2 (8) ◽

Author(s):

John R. Aulerich ◽

James Molloy

Keyword(s):

Stock Price ◽

Capital Gains ◽

Tax Rates ◽

Capital Gains Tax ◽

Tax Rate ◽

Holding Period ◽

Put Option ◽

Highly Correlated ◽

One Year

A reduction in the long-term capital gains tax rate provides investors with new strategies to minimize taxes and protect investment gains.  One such opportunity exists when an investor decides to sell a profitable stock with a holding period of less than one-year, resulting in short-term ordinary taxes.  The investor would find it more beneficial to sell the stock after one-year lapses, resulting in lower long-term capital gain taxes, although the longer holding period exposes the investor to the uncertainty of stock price movement.  A strategy to extend the holding period without excess risk would be to use the protective put option strategy, sometimes referred to as “investment insurance”.  The strategy involves the purchase of a put option to protect against the possible decline in the stock price, to take advantage of the lower long-term capital gains tax rate, and to preserve the upside potential of the stock.  Pursuant to IRS Publication 550, the IRS does not allow the use of a protective put to extend the holding period on the same security considered for sale.  Since the IRS does not allow a direct protective put hedge, this study will explore an alternative strategy involving the purchase of a put on a highly correlated investment to extend the holding period to recognize lower capital gains tax rates.  The paper presents example situations when an investor benefits from utilizing the correlated protective put option strategy.

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Is Establishing a New Partnership Useful Information for Investors in the Smartphone Supply Market?

Sustainability ◽

10.3390/su13105573 ◽

2021 ◽

Vol 13 (10) ◽

pp. 5573

Author(s):

Insung Son ◽

Sihyun Kim

Keyword(s):

South Korea ◽

Stock Price ◽

Individual Investors ◽

Trading Patterns ◽

Market Impacts ◽

The Us ◽

Signaling Effect ◽

Parts Suppliers ◽

Country Specific

This study analyzed partner volatility (new, old, revocation partners) and country-specific signal effects (United States (US), Taiwan, Japan, and South Korea) for Apple iPhone parts suppliers from 2007 to 2018. Mid- to long-term stock price movements were also analyzed to define trading patterns by investor type. The results using logit regression analysis revealed that new partners and revocation partners each have a signaling effect perceived as positive and negative information in the short term, and the excess returns by country showed a positive signaling effect in the order of the US, Taiwan, South Korea, and Japan. The findings also suggest that the change in the new partners’ stock price after the preannouncement of new products was useful investment information. Moreover, information asymmetry was found between individual investors, institutions, and foreigners. Results indicate that new partner selection in the smartphone market impacts corporate value and serves as useful investment information.

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Radiocarbon analysis in an Alpine ice core: record of anthropogenic and biogenic contributions to carbonaceous aerosols in the past (1650–1940)

Atmospheric Chemistry and Physics Discussions ◽

10.5194/acpd-6-5905-2006 ◽

2006 ◽

Vol 6 (4) ◽

pp. 5905-5931 ◽

Cited By ~ 3

Author(s):

T. M. Jenk ◽

S. Szidat ◽

M. Schwikowski ◽

H. W. Gäggeler ◽

S. Brütsch ◽

...

Keyword(s):

Fossil Fuels ◽

Ice Core ◽

Anthropogenic Sources ◽

Carbonaceous Aerosols ◽

Range Analysis ◽

Carbonaceous Particles ◽

The Past ◽

Time Period ◽

Ice Core Record

Abstract. Long-term concentration records of carbonaceous particles (CP) are of increasing interest in climate research due to their not yet completely understood effects on climate. Nevertheless, only poor data on their concentrations and sources in the past is available. We present a first long-term record of organic carbon (OC) and elemental carbon (EC) concentrations - the two main fractions of CP – along with the corresponding fraction of modern carbon (fM) derived from radiocarbon (14C) analysis. The combination of concentration measurements with 14C analysis of CP allows a distinction and quantification of natural, biogenic and anthropogenic fossil sources in the past. CP were extracted from an ice archive, with resulting carbon quantities in the microgram range. Analysis of 14C by accelerator mass spectrometry (AMS) was therefore highly demanding. We analysed 33 samples of 0.4 to 1 kg ice from a 150.5 m long ice core retrieved at Fiescherhorn glacier in December 2002 (46°33'3.2" N, 08°04'0.4'' E; 3900 m a.s.l.). Samples were taken from below the firn/ice transition down to bedrock, covering the time period 1650–1940 and thus the transition from the pre-industrial to the industrial era. Before 1800, OC was of pure biogenic origin with a mean concentration of 21±2 μg kg−1}. In 1940, OC concentration was more than a factor of 3 higher than this biogenic background, almost half of it originating from anthropogenic sources, i.e. from combustion of fossil fuels. The biogenic EC concentration was nearly constant over the examined time period with 6±1 μg kg−1. In 1940, the additional anthropogenic input of atmospheric EC was about 50 μg kg−1.

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Capital Gains Taxes and the Market Response to Earnings Announcements

Journal of the American Taxation Association ◽

10.2308/atax-52516 ◽

2019 ◽

Vol 42 (1) ◽

pp. 1-22

Author(s):

Greg Clinch ◽

Bradley P. Lindsey ◽

William J. Moser ◽

Mahmoud Odat

Keyword(s):

Stock Price ◽

Trading Volume ◽

Public Information ◽

Strong Support ◽

Capital Gains ◽

Tax Rate ◽

Price Response ◽

Capital Gains Taxes ◽

Public Signal

ABSTRACT We investigate the stock price and trading volume effects of differential capital gains taxes applied to short- and long-term capital gains when firms disclose public information. We extend the theoretical framework developed in Shackelford and Verrecchia (2002) linking differential capital gains taxes to price and volume, allowing for positive and negative news and incorporating exogenous non-taxable, uninformed traders. Our model, like Shackelford and Verrecchia (2002), indicates that price responses to public information are magnified, and volume inhibited, when short-term capital gains attract a higher tax rate than long-term capital gains. However, the effects are more nuanced than those in Shackelford and Verrecchia (2002). Specifically, the degree of magnification/inhibition for price reaction and trading volume differs across well-defined regions of public signal and supply change realizations. We use actual stock price and trading data to empirically investigate these predictions. Our results provide strong support for the price response predictions.

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Dividend Taxes, Investor Horizon and Idiosyncratic Volatility

The Accounting Review ◽

10.2308/tar-2018-0642 ◽

2020 ◽

Author(s):

Oliver Zhen Li ◽

Hang Liu ◽

Chenkai Ni

Keyword(s):

Stock Price ◽

Trading Volume ◽

Share Price ◽

Idiosyncratic Volatility ◽

Individual Investors ◽

Short Term ◽

Price Informativeness ◽

Holding Period ◽

Lock In ◽

Dividend Tax

We examine whether dividend tax induced lock-in reduces idiosyncratic volatility. The 2012 Dividend Tax Reform in China tied individual investors' dividend tax to the length of their share holding period, with short-term individual investors entering into higher tax brackets. We find that high dividend firms experience a reduction in idiosyncratic volatility, relative to low dividend firms, after the reform. The effect is more pronounced when high dividend firms have more retail investors and exhibit greater uncertainty. High dividend firms also experience a reduction in stock price crashes. Finally, with reduced trading by individual investors who are likely less informed, earnings announcements of high dividend firms trigger less trading volume during the event window post-reform, but enable more complete price reactions. We conclude that dividend tax induced lock-in, through discouraging short-term individual investors' trading, stabilizes the market and improves share price informativeness.

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Reduced Seroma Risk in Drainless Abdominoplasty Using Running Barbed Sutures: A 10-Year, Multicenter Retrospective Analysis

Aesthetic Surgery Journal ◽

10.1093/asj/sjz238 ◽

2019 ◽

Vol 40 (5) ◽

pp. 531-537 ◽

Cited By ~ 4

Author(s):

Allen D Rosen ◽

Karol A Gutowski ◽

Teresa Hartman

Keyword(s):

Risk Profile ◽

Suture Techniques ◽

Level Of Evidence ◽

Barbed Sutures ◽

The Past ◽

Interrupted Suture ◽

Time Period ◽

Patient Series ◽

Upper Abdominal

Abstract Background Drains are still commonly inserted during abdominoplasties despite extensive evidence documenting the benefits of drainless procedures. Continued improvements in progressive tension suturing (PTS) techniques and suture technologies have consistently shown a reduced seroma risk profile that outperforms procedures involving surgical drains. Objectives The aim of this report was to assess the authors’ combined patient series, which represents the largest and longest-running, retrospective, multicenter set of abdominoplasty patients treated with a PTS technique involving running barbed sutures. Methods Two surgical groups, each at different surgical centers, have for the past decade performed drainless abdominoplasties in which running barbed sutures were used. The results for all 445 patients in this series are reported by surgical center and pooled across centers. Results The majority of the 445 patients underwent drainless abdominoplasty alone (n = 368; 82.7%); most of the remaining patients did so as part of a circumferential body lift (n = 55; 12.4%). Overall, 33 (7.4%) patients experienced a postoperative complication. The overall seroma rate was 4.7% (21 of 445 patients), but this dropped to 2.3% after surgical technique modifications were made to decrease upper abdominal dead space. The seroma incidence in this series is markedly lower than the 13% seroma rate with drains reported during the same time period and comparable to those seen in drainless abdominoplasties with interrupted suture techniques. Conclusions Drainless abdominoplasty involving PTS with running barbed sutures shows long-term reproducibility in lowering seroma risk compared to techniques in which drains are inserted, supporting results from published series of drainless abdominoplasty procedures that use interrupted suture techniques. Level of Evidence: 4

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Impact of Excise Tax Hike to Stock Value (A Case Study of PT. Hanjaya Mandala Sampoerna, Tbk.)

European Journal of Business Management and Research ◽

10.24018/ejbmr.2020.5.1.238 ◽

2020 ◽

Vol 5 (1) ◽

Author(s):

Putu Bagus Adhi Wijaya ◽

Erman Sumirat

Keyword(s):

Stock Price ◽

Intrinsic Value ◽

The State ◽

Tax Rate ◽

Excise Tax ◽

Cigarette Industry ◽

The Past ◽

State Revenue ◽

Stock Value

Cigarette industry in Indonesia had contributed around 8% to the state revenue in 2018, and this number are expected to increase in 2020 due to higher excise tax rate for cigarette industry which believed can boost the state revenue. However, the cigarette’s excise tax hike that will be effective in January 1st, 2020 will have significant impact to all of the cigarette companies in Indonesia. The biggest cost of goods sold component of cigarette companies were the excise tax expense, thus, a significant increase on excise tax will reduce the company’s profitability. The significant decrease in company’s profitability could affect the company’s stock performance. In order to help the investors how to react to this situation, the intrinsic valuation of the company is required. Evaluating the company’s financial performance in the past five years and conducting absolute or often called intrinsic valuation of HMSP are believed to be important in order to help the investors how to act while the cigarette companies’ stock was all tumbled since the beginning of the year. This study examined absolute valuation of HMSP using the FCFE model. Absolute valuation models were calculated and had suggested that the current stock price of IDR 1,900 of HMSP is undervalued. The intrinsic value calculated from absolute valuation models was IDR 2,242.71. FCFE models show significantly high intrinsic value for HMSP, with potential return above 15%, it should attract the prospective investors to buy the company’s stock.

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Analisis Pengaruh Faktor-Faktor Fundamental Terhadap Harga Saham (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar di Bursa Efek Indonesia Periode 2012 – 2015)

Jurnal Muara Ilmu Ekonomi dan Bisnis ◽

10.24912/jmieb.v2i1.756 ◽

2018 ◽

Vol 2 (1) ◽

pp. 254

Author(s):

Ivan X

Keyword(s):

Stock Prices ◽

Stock Price ◽

Price Change ◽

Panel Regression ◽

Manufacturing Companies ◽

Market Theory ◽

Fundamental Factor ◽

The Past ◽

Efficient Market Theory ◽

Using Data

In efficient market theory it is mentioned that a price change of a stock's securities in the past can not be used to estimate price changes and the theory of signals is also mentioned that investors see signs made by managers of firms to predict future outlook. Therefore, the research was made to obtain empirical evidence by analyzing whether the fundamental factor has significant effect on stock price in manufacturing companies either partially or simultaneously on manufacturing companies listed on BEI in 2012-2015. The fundamental factors here are divided into profitability, solvency and liquidity are represented by ROA, ROE, NPM, DER, CashTA, TATO, and EPS ratios. Research using Data Panel Regression assisted with Eviews program. The results of research partially only NPM, CashTA and EPS variables that have a significant effect while for the variable ROA, ROE, DER and TATO no significant effect. Simultaneously all the variables together have a significant influence on stock prices.

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Equity Price Pressure from the 1998 Reduction in the Capital Gains Holding Period

Journal of the American Taxation Association ◽

10.2308/jata.2002.24.s-1.70 ◽

2002 ◽

Vol 24 (s-1) ◽

pp. 70-93 ◽

Cited By ~ 14

Author(s):

Jennifer L. Blouin ◽

Jana Smith Raedy ◽

Douglas A. Shackelford

Keyword(s):

Portfolio Management ◽

Stock Prices ◽

Stock Price ◽

Trading Volume ◽

Capital Gains ◽

Individual Investors ◽

Capital Gains Tax ◽

Marginal Tax Rate ◽

Holding Period ◽

Price Pressure

This paper provides evidence consistent with shareholders' personal tax incentives affecting stock prices and trading volume. On June 24, 1998, the marginal tax rate on capital gains was reduced from 28 percent to 20 percent for individual investors holding shares between 12 and 18 months. This study compares firms whose initial public shareholders immediately benefited from the reduction to other IPO firms. The sample of immediately affected firms recorded mean, incremental, one-day stock price declines of −1.3 percent amid heavy trading. The results are consistent with capital gains tax planning constraining investment portfolio management. When the constraint was lifted, enough shareholders sold that prices moved. The results imply that despite increasingly liquid capital markets, transaction costs remain large enough to prevent investors from entering the market immediately and fully offsetting downward price pressure from individual capital gains tax management.

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Tax-Motivated Trading by Individual Investors

The American Economic Review ◽

10.1257/000282805775014461 ◽

2005 ◽

Vol 95 (5) ◽

pp. 1605-1630 ◽

Cited By ~ 128

Author(s):

Zoran Ivković ◽

James Poterba ◽

Scott Weisbenner

Keyword(s):

Capital Gains ◽

Disposition Effect ◽

Individual Investors ◽

Tax Rates ◽

Tax Rate ◽

Lock In Effect ◽

Lock In ◽

Tax Loss ◽

Statutory Tax Rate

We analyze stock trades made by individuals holding stock in both taxable and tax-deferred accounts. By comparing trades across these two types of accounts, we uncover a capital gains lock-in effect in taxable accounts. The lock-in effect is more pronounced for large stock transactions and for stocks held for at least 12 months. Over shorter horizons, the disposition effect outweighs the lock-in effect. Comparison of loss realizations in taxable and tax-deferred accounts yields evidence of tax-loss selling throughout the year. Effective accrual tax rates for stocks that experience substantial appreciation are substantially below the statutory tax rate on long-term gains.

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