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The Lock-In Effect of Capital Gains Taxes: Evidence from the RJR Nabisco Leveraged Buyout

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  • Landsman, Wayne R.
  • Shackelford, Douglas A.
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    Abstract

    Studies overcomes data limitations and analyses capital gains taxes using the 1989 RJR Nabisco leverage buyout as an example. Finds negative correlation between price and tax basis for the shares sold.

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    Bibliographic Info

    Article provided by National Tax Association in its journal National Tax Journal.

    Volume (Year): 48 (1995)
    Issue (Month): 2 (June)
    Pages: 245-259

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    Handle: RePEc:ntj:journl:v:48:y:1995:i:no._2:p:245-259

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    1. Cook, Eric W. & O'Hare, John F., 1992. "Capital Gains Redux: Why Holding Periods Matter," National Tax Journal, National Tax Association, National Tax Association, vol. 45(1), pages 53-76, March.
    2. Joseph E. Stiglitz, 1983. "Some Aspects of the Taxation of Capital Gains," NBER Working Papers 1094, National Bureau of Economic Research, Inc.
    3. Henderson, Yolanda K., 1990. "Capital Gains Tax Rates and Stock Market Volume," National Tax Journal, National Tax Association, National Tax Association, vol. 43(4), pages 411-25, December.
    4. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, Econometric Society, vol. 48(4), pages 817-38, May.
    5. Stulz, ReneM., 1988. "Managerial control of voting rights : Financing policies and the market for corporate control," Journal of Financial Economics, Elsevier, Elsevier, vol. 20(1-2), pages 25-54, January.
    6. Laurie Simon Bagwell, 1991. "Share Repurchase and Takeover Deterrence," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 72-88, Spring.
    7. Auten, Gerald E & Clotfelter, Charles T, 1982. "Permanent versus Transitory Tax Effects and the Realization of Capital Gains," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 97(4), pages 613-32, November.
    8. Constantinides, George M, 1983. "Capital Market Equilibrium with Personal Tax," Econometrica, Econometric Society, Econometric Society, vol. 51(3), pages 611-36, May.
    9. Kiefer, Donald W., 1990. "Lock-In Effect Within a Simple Model of Corporate Stock Trading," National Tax Journal, National Tax Association, National Tax Association, vol. 43(1), pages 75-94, March.
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    Cited by:
    1. Todd Sinai & Joseph Gyourko, . "The Asset Price Incidence of Capital Gains Taxes: Evidence from the Taxpayer Relief Act of 1997 and Publicly-Traded Real Estate Firms," Zell/Lurie Center Working Papers, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania 311, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
    2. Andreas Haufler & Pehr-Johan Norbäck & Lars Persson, 2011. "Entrepreneurial Innovations and Taxation," CESifo Working Paper Series, CESifo Group Munich 3473, CESifo Group Munich.
    3. Mark H. Lang & Douglas A. Shackelford, 1999. "Capitalization of Capital Gains Taxes: Evidence from Stock Price Reactions to the 1997 Rate Reduction," NBER Working Papers 6885, National Bureau of Economic Research, Inc.
    4. Hanlon, Michelle & Heitzman, Shane, 2010. "A review of tax research," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 50(2-3), pages 127-178, December.
    5. Claudio Agostini & Mariel C. Siravegna, 2009. "Efectos de la Exención Tributaria a las Ganancias de Capital en el Precio de las Acciones en Chile," ILADES-Georgetown University Working Papers, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines inv233, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
    6. Klein, Peter, 1999. "The capital gain lock-in effect and equilibrium returns," Journal of Public Economics, Elsevier, Elsevier, vol. 71(3), pages 355-378, March.
    7. Mihir A. Desai & James R. Hines Jr., 2002. "Expectations and Expatriations: Tracing the Causes and Consequences of Corporate Inversions," NBER Working Papers 9057, National Bureau of Economic Research, Inc.
    8. Klein, Peter, 2004. "The capital gain lock-in effect and perfect substitutes," Journal of Public Economics, Elsevier, Elsevier, vol. 88(12), pages 2765-2783, December.
    9. Landsman, Wayne R. & Shackelford, Douglas A. & Yetman, Robert J., 2002. "The determinants of capital gains tax compliance: evidence from the RJR Nabisco leveraged buyout," Journal of Public Economics, Elsevier, Elsevier, vol. 84(1), pages 47-74, April.
    10. Jin, Li & Kothari, S.P., 2008. "Effect of personal taxes on managers' decisions to sell their stock," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 46(1), pages 23-46, September.
    11. Richard J. Rendleman, Jr. & Douglas A. Shackelford, 2003. "Diversification and the Taxation of Capital Gains and Losses," NBER Working Papers 9674, National Bureau of Economic Research, Inc.
    12. Jennifer L. Blouin & Jana Smith Raedy & Douglas A. Shackelford, 2000. "Capital Gains Holding Periods and Equity Trading: Evidence from the 1998 Tax Act," NBER Working Papers 7827, National Bureau of Economic Research, Inc.

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