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A Possible Reconciliation Of Some Of The Conflicting Findings On Closed‐End Fund Discounts: A Note

Author

Listed:
  • Richard Deaves
  • Itzhak Krinsky

Abstract

The most obvious explanation for the closed‐end fund puzzle, the existence of managerial contribution (i.e., managerial performance less managerial fees), has been called into disrepute because of the inability of researchers to consistently document a negative relationship between such benefits and discounts. We present a model which shows that it is possible to account for some of the stylized facts without abandoning market efficiency and rationality. It is suggested that when one takes into consideration the impact of managerial contribution on the probability of open‐ending, a negative relationship between managerial contribution and discounts actually may result.

Suggested Citation

  • Richard Deaves & Itzhak Krinsky, 1994. "A Possible Reconciliation Of Some Of The Conflicting Findings On Closed‐End Fund Discounts: A Note," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 21(7), pages 1047-1057, October.
    • Handle: RePEc:bla:jbfnac:v:21:y:1994:i:7:p:1047-1057
    DOI: 10.1111/j.1468-5957.1994.tb00363.x
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    References listed on IDEAS

    as
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    4. Roenfeldt, Rodney L. & Tuttle, Donald L., 1973. "An examination of the discounts and premiums of closed-end investment companies," Journal of Business Research, Elsevier, vol. 1(2), pages 129-140.
    5. Brickley, James A. & Schallheim, James S., 1985. "Lifting the Lid on Closed-End Investment Companies: A Case of Abnormal Returns," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 20(1), pages 107-117, March.
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    7. Thompson, Rex, 1978. "The information content of discounts and premiums on closed-end fund shares," Journal of Financial Economics, Elsevier, vol. 6(2-3), pages 151-186.
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