Narayanan Jayaraman (Georgia Institute of Technology,) Ajay Khorana (Georgia Institute of Technology,) Edward Nelling (Drexel University)
Abstract
This study examines the determinants of mutual fund mergers and their subsequent wealth impact on shareholders of target and acquiring funds. Results indicate significant improvements in postmerger performance and a reduction in expense ratios for target fund shareholders. In contrast, acquiring fund shareholders experience a significant deterioration in postmerger performance. The net asset flows continue to remain negative for the combined fund in the year following the merger. The likelihood of a fund merger is inversely related to fund size for both within- and across-family mutual fund mergers. However, poor past performance is a significant determinant for only within-family mergers. Copyright The American Finance Association 2002.
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Volume (Year): 57 (2002) Issue (Month): 3 (06) Pages: 1521-1551 Download reference. The following formats are available: HTML
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