158,249 research outputs found

    Information Acquisition and Investment Decisions on the Internet: An Empirical Investigation

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    With intensifying competition, the significance of understanding customer characteristics related to information acquisition and decision making on the Internet has increased. An understanding of customer characteristics can become a crucial element in the development and implementation of marketing strategy. This paper examines the influence of some key demographic and psychological variables on information acquisition and investment decisions on the Internet, related to mutual funds. Findings indicate that product familiarity, age, and information breadth significantly influenced information acquisition. For investment decisions on the Internet, in addition to the above-mentioned variables, sex and overconfidence was also significant

    Conditional Information Acquisition

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    When a portion of institutional investors are prohibited from short selling, news that generates differences of opinions also affects information acquisition. Investors facing a short-sale prohibition (e.g., mutual funds) acquire less information when the sentiment of news is positive, as positive sentiment increases the likelihood that they will be unable to trade. Also, prices are more informative following news with negative sentiment than news with positive sentiment. These novel predictions are tested empirically using new measures of information acquisition derived from a hand-collected sample of mutual fund and hedge fund IP addresses. When the sentiment of recent news has been negative instead of positive, information acquisition by mutual funds increases by 16% relative to hedge funds, and prices are up to 14% more informative.Doctor of Philosoph

    Does It Pay to Be Informed? Expenditure Efficiency in the US Mutual Fund Industry

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    The mutual fund industry would like us to believe that fund expenses are justifiable by their extensive management expertise, security analysis and the consequent delivery of returns that exceed the market performance. Management know-how is costly and thus it drives up the expenditure of actively managed mutual funds and potentially lowers their net returns. Nevertheless the fund managers argue that their contributions to the returns fully outweigh their costs and in general their trading strategies add value to the investors. On the other hand many academics hold that such claims are fundamentally misleading and actively managed funds cannot continuously outperform a market index. [excerpt

    The Deregulation of the Private Equity Markets and the Decline in IPOs

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    The deregulation of securities laws—in particular the National Securities Markets Improvement Act (NSMIA) of 1996—has increased the supply of private capital to late-stage private startups, which are now able to grow to a size that few private firms used to reach. NSMIA is one of a number of factors that have changed the going-public versus staying-private trade-off, helping bring about a new equilibrium where fewer startups go public, and those that do are older. This new equilibrium does not reflect an initial public offering (IPO) market failure. Rather, founders are using their increased bargaining power vis-à-vis investors to stay private longer

    Crises and Tax

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    How can law best mitigate harm from crises like storms, epidemics, and financial meltdowns? This Article uses the law and economics framework of property rules and liability rules to analyze crisis responses across multiple areas of law, focusing particularly on the ways the Internal Revenue Service (IRS) battled the 2008–09 financial crisis. Remarkably, the IRS’s responses to that crisis cost more than Congress’s higher-profile bank bailouts. Despite their costs, many of the IRS’s responses were underinclusive, causing preventable layoffs and foreclosures. This Article explains these failures and demonstrates that the optimal response to crises is to shift from harsh property rules to compensatory liability rules, temporarily. Arranging such a shift in advance further mitigates harm when crises arrive. This analysis also provides new insights for the broader literature on property rules and liability rules. For example, arranging in advance for temporary moves to liability rules during crises can avoid windfalls, allow speedier relief, and encourage flexible private contracts. These lessons have practical applications in areas as far afield as how constitutional law and patent law respond to epidemics

    The Great ETF Tax Swindle: The Taxation of In-Kind Redemptions

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    Since the repeal of the General Utilities doctrine over 30 years ago, corporations must recognize gain when distributing appreciated property to their shareholders. Regulated investment companies (RICs), which generally must be organized as domestic corporations, are exempt from this rule when distributing property in kind to a redeeming shareholder. In-kind redemptions, while rare for mutual funds, are a fundamental feature of exchange-traded funds (ETFs). Because fund managers decide which securities to distribute, they distribute assets with unrealized gains and thereby significantly reduce the future tax burdens of their current and future shareholders. Many ETFs have morphed into investment vehicles that offer better after-tax returns than IRAs funded with after-tax contributions. Furthermore, this rule is now being turbocharged. Some mutual fund families have created ETF classes of shares for some of their mutual funds, which permits the ETF shareholders to remove the gains attributable to the shareholders of the regular share class. Another firm acts as a strategic investor to assist mutual funds in eliminating their unrealized gains through contributions and redemptions. These transactions permit current and future fund shareholders to inappropriately defer tax on their economic gains and give ETFs and other mutual funds with ETF share classes a significant tax advantage over other investment vehicles. This article considers various options that tax policymakers should consider to eliminate the ETF tax subsidy including explicitly extending this favorable tax treatment to all RICs by exempting fund-level gains from tax, repealing the exemption rule, limiting the amount of unrealized gains a fund can distribute, requiring ETFs to reduce the basis of their remaining property by the unrecognized gain of distributed property, or requiring ETFs to be taxed as partnerships

    Mutual fund investing : one of the main ways of saving for retirement in Russia

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    One of the most acute problems in the world today is provision of a respectable living for the elderly. Today the process of aging population (as a result of a declined birth rate and increased life expectancy) has touched all countries of the world - developed countries as well as countries like Russia. Consequently, reforming traditional pension systems to deal with the changing situation has become an important issue around the world. These reforms typically center on the implementation of some form of funding of future pension benefits. This also holds for Russia, where in 1995 pension reform legislation introduced the so-called “accumulation pension”. In this context, this article will deal with the issues concerning the establishment of mutual funds, legal aspects of their operating and their investing opportunities. There will be carried out a comparative analysis of mutual funds with the other forms of public investments, namely: Common Funds of Bank Management, Voucher Investment Funds and Joint-stock Investment Funds

    Mineral Exploration Funds

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    While independent mineral operators have traditionally been confronted with a scarcity of risk capital for mineral development, willing investors have often experienced equal difficulty in locating responsible mineral operations in which to invest. The exploration fund, a means of channeling risk capital furnished by high-bracket taxpayers into mineral exploration, is one answer to this dilemma. In this article the author deals extensively with the mineral, tax, business association, and securities law problems involved in the organization and operation of such a fund

    The SEC's "Fair Value" Standard for Mutual Fund Investment in Restricted Shares and Other Illiquid Securities

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    Mutual funds generally do not invest in venture capital, private equity, or restricted shares of public companies. Consequently, individuals who desire to invest in such securities are unable to do so through diversified mutual funds. In this paper, we identify public policies and regulations that discourage mutual fund involvement in the markets for illiquid equity. We also present evidence that changes in SEC policy caused mutual funds to retreat from investing in illiquid equity. Under the Investment Company Act of l940, the SEC requires mutual fund boards to determine and report the “fair value” of their investments in restricted shares and other illiquid equity claims. The SEC interprets fair value to mean value in current sale. Under the Investment Company Act, fair value reporting is a “certification” standard that presumes investors rely on the value representations of the fund board and its auditors. We consider whether alternatives to certification and current sale valuation could reduce barriers to mutual fund investment, without exposing individuals who invest in mutual funds to excessive risk or potential manipulation. To assess the effects of public policies, we analyze recent efforts of the SEC to apply the fair-value standard and examine court decisions arising from subsequent litigation. We also analyze the financial economics literature concerning discounts for illiquidity and the implications for valuing restricted shares. The paper concludes with a discussion of policy alternatives, including allowing funds to rely more on “transparency” in lieu of certification and allowing funds more latitude in determining and reporting the values of their illiquid securities.
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