Year‐End Tax‐Induced Sales and Stock Market Seasonality

Dan Givoly, ARIE OVADIA

Research output: Contribution to journalArticle

73 Citations (Scopus)

Abstract

The paper relates two phenomena in the stock market: the high return during the month of January and the apparent existence of widespread sales of stocks for tax purposes towards the end of the fiscal year. The findings suggest that, due to the tax‐induced sales, the price of many stocks over the last 35 years was temporarily depressed in December but recovered in the following January. This price recovery is a major contributor to the high returns observed in January. The tax effect is present in firms of all sizes but much more pronounced for small firms. The analysis also indicates that a more precise identification of the tax‐switch candidates may prove that the tax‐induced sales are, in fact, the sole contributor to the high January's returns. 1983 The American Finance Association

Original languageEnglish (US)
Pages (from-to)171-185
Number of pages15
JournalThe Journal of Finance
Volume38
Issue number1
DOIs
StatePublished - Jan 1 1983

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Seasonality
Stock market
Tax
Finance
Fiscal
Small firms
Tax effects

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Givoly, Dan ; OVADIA, ARIE. / Year‐End Tax‐Induced Sales and Stock Market Seasonality. In: The Journal of Finance. 1983 ; Vol. 38, No. 1. pp. 171-185.
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Year‐End Tax‐Induced Sales and Stock Market Seasonality. / Givoly, Dan; OVADIA, ARIE.

In: The Journal of Finance, Vol. 38, No. 1, 01.01.1983, p. 171-185.

Research output: Contribution to journalArticle

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