The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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The Pricing of When‐Issued Common Stock: A Note
Published: 9/1983, Volume: 38, Issue: 4 | DOI: 10.1111/j.1540-6261.1983.tb02298.x | Cited by: 10
DOSOUNG CHOI, ROBERT A. STRONG
Market Valuation of Tax‐Timing Options: Evidence from Capital Gains Distributions
Published: 3/9/2006, Volume: 61, Issue: 2 | DOI: 10.1111/j.1540-6261.2006.00856.x | Cited by: 43
J. B. CHAY, DOSOUNG CHOI, JEFFREY PONTIFF
We examine a distribution that is taxed as a capital gain rather than as a dividend. Since the distribution induces a realized capital gain while the price change is an unrealized gain, ex‐day return behavior provides evidence of the value of tax‐timing capital gains. We show that investors are compensated 7¢ in unrealized gains for each dollar of realized capital gains, that is, $1 of realized capital gains is equivalent to 93¢ of unrealized gains. An investor with a tax rate on realized gains of 15% has an effective tax rate on unrealized capital gains of 8.6%.
Learning about Mutual Fund Managers
Published: 11/10/2016, Volume: 71, Issue: 6 | DOI: 10.1111/jofi.12405 | Cited by: 70
DARWIN CHOI, BIGE KAHRAMAN, ABHIROOP MUKHERJEE
We study capital allocations to managers with two mutual funds, and show that investors learn about managers from their performance records. Flows into a fund are predicted by the manager's performance in his other fund, especially when he outperforms and when signals from the other fund are more useful. In equilibrium, capital should be allocated such that there is no cross‐fund predictability. However, we find positive predictability, particularly among underperforming funds. Our results are consistent with incomplete learning: while investors move capital in the right direction, they do not withdraw enough capital when the manager underperforms in his other fund.
What Matters to Individual Investors? Evidence from the Horse's Mouth
Published: 3/20/2020, Volume: 75, Issue: 4 | DOI: 10.1111/jofi.12895 | Cited by: 179
JAMES J. CHOI, ADRIANA Z. ROBERTSON
We survey a representative sample of U.S. individuals about how well leading academic theories describe their financial beliefs and decisions. We find substantial support for many factors hypothesized to affect portfolio equity share, particularly background risk, investment horizon, rare disasters, transactional factors, and fixed costs of stock market participation. Individuals tend to believe that past mutual fund performance is a good signal of stock‐picking skill, actively managed funds do not suffer from diseconomies of scale, value stocks are safer and do not have higher expected returns, and high‐momentum stocks are riskier and do have higher expected returns.
Reinforcement Learning and Savings Behavior
Published: 11/25/2009, Volume: 64, Issue: 6 | DOI: 10.1111/j.1540-6261.2009.01509.x | Cited by: 254
JAMES J. CHOI, DAVID LAIBSON, BRIGITTE C. MADRIAN, ANDREW METRICK
We show that individual investors over‐extrapolate from their personal experience when making savings decisions. Investors who experience particularly rewarding outcomes from 401(k) saving—a high average and/or low variance return—increase their 401(k) savings rate more than investors who have less rewarding experiences. This finding is not driven by aggregate time‐series shocks, income effects, rational learning about investing skill, investor fixed effects, or time‐varying investor‐level heterogeneity that is correlated with portfolio allocations to stock, bond, and cash asset classes. We discuss implications for the equity premium puzzle and interventions aimed at improving household financial outcomes.
Borrowing to Save? The Impact of Automatic Enrollment on Debt
Published: 8/9/2021, Volume: 77, Issue: 1 | DOI: 10.1111/jofi.13069 | Cited by: 60
JOHN BESHEARS, JAMES J. CHOI, DAVID LAIBSON, BRIGITTE C. MADRIAN, WILLIAM L. SKIMMYHORN
Does automatic enrollment into a retirement plan increase financial distress due to increased borrowing outside the plan? We study a natural experiment created when the U.S. Army began automatically enrolling newly hired civilian employees into the Thrift Savings Plan. Four years after hire, automatic enrollmentincreases cumulative contributions to the plan by 4.1% of annual salary, but we find little evidence ofincreased financial distress. Automatic enrollment causes no significant change in credit scores, debt balances excluding auto debt and first mortgages, or adverse credit outcomes, with the possible exception of increasedfirst‐mortgage balances in foreclosure.
The Effect of Providing Peer Information on Retirement Savings Decisions
Published: 5/11/2015, Volume: 70, Issue: 3 | DOI: 10.1111/jofi.12258 | Cited by: 321
JOHN BESHEARS, JAMES J. CHOI, DAVID LAIBSON, BRIGITTE C. MADRIAN, KATHERINE L. MILKMAN
Using a field experiment in a 401(k) plan, we measure the effect of disseminating information about peer behavior on savings. Low‐saving employees received simplified plan enrollment or contribution increase forms. A randomized subset of forms stated the fraction of age‐matched coworkers participating in the plan or age‐matched participants contributing at least 6% of pay to the plan. We document an oppositional reaction: the presence of peer information decreased the savings of nonparticipants who were ineligible for 401(k) automatic enrollment, and higher observed peer savings rates also decreased savings. Discouragement from upward social comparisons seems to drive this reaction.