Document Type
Article
Publication Date
2025
Publication Title
Journal of Behavioral Finance
Keywords
individual investors, recency bias, tax-loss selling
Abstract
In the first large-sample study of recency bias mitigation, we show that individual investors dispose of relatively longer-held stocks in December tax-loss sales compared to other months. We argue that before engaging in December tax-loss sales, investors review all or most of their losing positions instead of focusing on the most recently acquired stocks. Thus, reviewing relevant information mitigates recency bias in a large, diverse sample of investors. This behavior is consistent across investor, stock, and portfolio characteristics; it is found even in accounts with only long-term capital losses.
Funding Source
This work was supported by Country Financial. This article was published Open Access thanks to a transformative agreement between Milner Library and Taylor & Francis.
DOI
10.1080/15427560.2025.2485461
Recommended Citation
Kotomin, V., & Varma, A. (2025). Debiasing Recency: Evidence from Individual Investor Stock Sales. Journal of Behavioral Finance, 1–17. https://doi.org/10.1080/15427560.2025.2485461
Comments
First published in Journal of Behavioral Finance (2025): https://doi.org/10.1080/15427560.2025.2485461.
This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License, which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way.