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The Underperformance of Acquiring Mutual Funds: A Re-Examination of a Puzzle

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  • Manel Kammoun
  • Djerry C. Tandja M.

Abstract

This paper studies the performance of Canadian acquiring mutual funds in the post-acquisition period by using 339 acquisitions during the period of 2008-2015. Contrary to the facts reported in studies in the U.S., we find that, for within-family mergers, the performance and the size of acquiring funds increase after the merger. Overall, our results suggest that the within-family merger of Canadian mutual funds is a win-win scenario for participating funds, as acquiring and target funds’ performance increases after the merger. Our results are consistent with a model where board of directors of merging funds are able to select value-enhancing acquisition opportunities, as they hold, due to the management structure of Canadian mutual funds, superior information about within-family target funds.

Suggested Citation

  • Manel Kammoun & Djerry C. Tandja M., 2021. "The Underperformance of Acquiring Mutual Funds: A Re-Examination of a Puzzle," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(7), pages 1-77, June.
    • Handle: RePEc:ibn:ijefaa:v:13:y:2021:i:7:p:77
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    References listed on IDEAS

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    1. L'Her, Jean-Francois & Masmoudi, Tarek & Suret, Jean-Marc, 2004. "Evidence to support the four-factor pricing model from the Canadian stock market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 14(4), pages 313-328, October.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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