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Fund Manager Succession in Closed-End Mutual Funds


  • Rowe, Wei Wang
  • Davidson, Wallace N, III


Managing the succession process by the hiring and firing of key executives is one of the important functions of a board of directors. In this research we study successions of fund managers in the closed-end mutual fund industry. The agency issues inherent in closed-end mutual funds makes them a unique laboratory for such a study. Our results suggest that while the overall abnormal returns of these manager changes are statistically insignificant, that the returns are more positive for funds with large expense ratios and for funds trading at a discount. We also find the abnormal returns are negatively related to the percentage of inside director stock ownership. Corporate bond funds and international equity funds react more negatively to these announcements than other types of funds. The abnormal returns do not appear to be related to board composition, but board composition does vary across fund type, and may therefore indirectly influence the results. Copyright 2000 by MIT Press.

Suggested Citation

  • Rowe, Wei Wang & Davidson, Wallace N, III, 2000. "Fund Manager Succession in Closed-End Mutual Funds," The Financial Review, Eastern Finance Association, vol. 35(3), pages 53-78, August.
  • Handle: RePEc:bla:finrev:v:35:y:2000:i:3:p:53-78

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    Cited by:

    1. Davies, Richard & Fletcher, Mary & Marshall, Andrew, 2013. "Investigating the role of illiquidity in explaining the UK closed-end country fund discount," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 121-130.
    2. Wu, Youchang & Wermers, Russ & Zechner, Josef, 2012. "Governance and shareholder value in delegated portfolio management: The case of closed-end funds," CFR Working Papers 12-11, University of Cologne, Centre for Financial Research (CFR).
    3. Elsaid, Eahab & Davidson III, Wallace N., 2009. "What happens to CEO compensation following turnover and succession?," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 424-447, May.

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