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Attracting Flows by Attracting Big Clients

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  • LAUREN COHEN
  • BRENO SCHMIDT
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    Abstract

    We explore a new channel for attracting inflows using a unique data set of corporate 401(k) retirement plans and their mutual fund family trustees. Families secure substantial inflows by being named trustee. We find that family trustees significantly overweight, and are reluctant to sell, their 401(k) client firm's stock. Trustee overweighting is more pronounced when the relationship is more valuable to the trustee family, and is concentrated in those funds receiving the greatest benefit from the inflows. We quantify this flow benefit and find that inclusion in the 401(k) plan has an economically and statistically large, positive effect on inflows. Copyright (c) 2009 the American Finance Association.

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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1540-6261.2009.01496.x
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    Bibliographic Info

    Article provided by American Finance Association in its journal The Journal of Finance.

    Volume (Year): 64 (2009)
    Issue (Month): 5 (October)
    Pages: 2125-2151

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    Handle: RePEc:bla:jfinan:v:64:y:2009:i:5:p:2125-2151

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    Cited by:
    1. Alessandro Gavazza, 2011. "Demand spillovers and market outcomes in the mutual fund industry," RAND Journal of Economics, RAND Corporation, vol. 42(4), pages 776-804, December.
    2. Agarwal, Vikas & Ma, Linlin, 2013. "Managerial multitasking in the mutual fund industry," CFR Working Papers 13-10, University of Cologne, Centre for Financial Research (CFR).
    3. Clemens Sialm & Laura Starks & Hanjiang Zhang, 2014. "Defined Contribution Pension Plans: Sticky or Discerning Money?," Discussion Papers 13-022, Stanford Institute for Economic Policy Research.
    4. Veronika K. Pool & Clemens Sialm & Irina Stefanescu, 2013. "It Pays to Set the Menu: Mutual Fund Investment Options in 401(k) Plans," NBER Working Papers 18764, National Bureau of Economic Research, Inc.
    5. Hung, Weifeng, 2014. "Institutional trading and attention bias," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 29(C), pages 71-91.
    6. Gantchev, Nickolay, 2013. "The costs of shareholder activism: Evidence from a sequential decision model," Journal of Financial Economics, Elsevier, vol. 107(3), pages 610-631.
    7. Irvine, Paul & Park, Shawn Saeyeul & Yildizhan, Celim, 2013. "Customer-base concentration, profitability and distress across the corporate life cycle," MPRA Paper 53886, University Library of Munich, Germany.
    8. Amil Dasgupta & Konstantinos Zachariadis, 2011. "Delegated activism and disclosure," LSE Research Online Documents on Economics 43078, London School of Economics and Political Science, LSE Library.

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