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Portfolio manager ownership and mutual fund herding: Evidence from China

Author

Listed:
  • Chen, Qi
  • Zainudin, Rozaimah
  • Wang, Peng
  • Zhai, Lihong

Abstract

This study investigates whether portfolio manager ownership affects mutual fund herding. Using a unique, hand-collected dataset of actively managed Chinese equity funds from 2012 to 2025, we document that higher managerial ownership significantly reduces fund herding. This finding remains robust against a battery of robustness checks and endogeneity analyses. Further mechanism analyses reveal that the mitigating effect is especially pronounced among managers who face stronger agency-driven herding incentives, including those with poor past performance, limited industry experience, or compensation linked to short-term performance. This suggests that managerial ownership suppresses herding primarily by curbing agency-driven herding motives. Overall, our findings provide novel evidence that managerial ownership serves as an effective governance mechanism for mitigating fund herding behavior, with implications for fund governance design and investor protection.

Suggested Citation

  • Chen, Qi & Zainudin, Rozaimah & Wang, Peng & Zhai, Lihong, 2026. "Portfolio manager ownership and mutual fund herding: Evidence from China," Finance Research Letters, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:finlet:v:106:y:2026:i:c:s1544612326008640
    DOI: 10.1016/j.frl.2026.110336
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