Fully Closed: Individual Responses to Realized Gains and Losses

Steffen Meyer; Michaela Pagel

doi:10.1111/jofi.13122

Fully Closed: Individual Responses to Realized Gains and Losses

^*Corresponding author af dette arbejde

Publikation: Bidrag til tidsskrift/Konferencebidrag i tidsskrift /Bidrag til avis › Tidsskriftartikel › Forskning › peer review

8 Citationer (Scopus)

Abstract

We analyze how individuals reinvest realized capital gains and losses exploiting plausibly exogenous sales due to mutual fund liquidations. Individuals reinvest 83% if a forced sale results in a gain relative to the initial investment; but reinvest only 40% in the event of a loss. This difference is statistically significant for more than six months and arises because many individuals forced to realize a loss choose not to reinvest anything and some even exit the stock market altogether. Individuals treat realized losses differently from paper losses and are discouraged from investing more and participating in the stock market.

Originalsprog	Engelsk
Tidsskrift	Journal of Finance
Vol/bind	77
Nummer	3
Sider (fra-til)	1529-1585
Antal sider	57
ISSN	0022-1082
DOI	https://doi.org/10.1111/jofi.13122
Status	Udgivet - jun. 2022
Udgivet eksternt	Ja

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abstract = "We analyze how individuals reinvest realized capital gains and losses exploiting plausibly exogenous sales due to mutual fund liquidations. Individuals reinvest 83% if a forced sale results in a gain relative to the initial investment; but reinvest only 40% in the event of a loss. This difference is statistically significant for more than six months and arises because many individuals forced to realize a loss choose not to reinvest anything and some even exit the stock market altogether. Individuals treat realized losses differently from paper losses and are discouraged from investing more and participating in the stock market.",

author = "Steffen Meyer and Michaela Pagel",

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Fully Closed: Individual Responses to Realized Gains and Losses

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