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Advertising and Mutual Funds: From Families to Individual Funds

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  • Gallaher, Steven
  • Kaniel, Ron
  • Starks, Laura T

Abstract

We find that advertising appears to have significant effects on investor flows at the industry, family and individual fund level. At the industry level, flows are higher in months with more advertising dollars spent, even for non-advertising families. At the family level, flows have a convex relation with advertising expenditures, similar to that for performance, with a significant positive effect for high relative advertisers only. At the individual fund level, advertising stems redemptions rather than increasing purchases of fund shares. We further find that advertising can affect the fund’s flow-performance sensitivity, dampening it for poorly performing funds and increasing it for highly performing funds.

Suggested Citation

  • Gallaher, Steven & Kaniel, Ron & Starks, Laura T, 2015. "Advertising and Mutual Funds: From Families to Individual Funds," CEPR Discussion Papers 10329, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10329
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    References listed on IDEAS

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    Cited by:

    1. Sorhage, Christoph, 2015. "Outsourcing of mutual funds' non-core competencies," CFR Working Papers 14-04 [rev.2], University of Cologne, Centre for Financial Research (CFR).
    2. Elif Sisli Ciamarra & Abigail Hornstein, 2015. "Board Overlaps in Mutual Fund Families," Working Papers 92, Brandeis University, Department of Economics and International Businesss School.
    3. Lemeunier, Sebastien M., 2017. "Optimization of brokers’ commissions," Finance Research Letters, Elsevier, vol. 20(C), pages 137-145.
    4. Ayadi, Mohamed A. & Kryzanowski, Lawrence & Mohebshahedin, Mahmood, 2018. "Impact of sponsorship on fixed-income fund performance," The Quarterly Review of Economics and Finance, Elsevier, vol. 67(C), pages 121-137.

    More about this item

    Keywords

    advertising; flow; mutual fund; performance;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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