Managerial Investment in Mutual Funds
The SEC requires mutual fund managers to disclose annually investments in self-managed funds. We examine whether such investments align managerial and investor interests using a hand- collected panel dataset at nearly 400 no load funds. We believe we are the first to document and examine the time series variation in these investments. Managerial investment fluctuates markedly within funds, contrary to prior researchers’ assumptions that the levels would be non- decreasing, and is not systematically related to fund characteristics. Fund returns are higher for solo-managed funds with managerial investment. On the other hand, team-managed funds have lower excess returns and management fees when managers invest more in the fund. These results suggest that managerial investment does not signal interest alignment but is rather an idiosyncratic personal decision.
|Date of creation:||Feb 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.wesleyan.edu/econ/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Paul G. Mahoney, 2004. "Manager-Investor Conflicts in Mutual Funds," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 161-182, Spring.
- Leslie A. Jeng & Andrew Metrick & Richard Zeckhauser, 2003. "Estimating the Returns to Insider Trading: A Performance-Evaluation Perspective," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 453-471, May.
- Martijn Cremers & Joost Driessen & Pascal Maenhout & David Weinbaum, 2005.
"Does Skin in the Game Matter? Director Incentives and Governance in the Mutual Fund Industry,"
Yale School of Management Working Papers
amz2470, Yale School of Management, revised 01 Nov 2008.
- Cremers, Martijn & Driessen, Joost & Maenhout, Pascal & Weinbaum, David, 2009. "Does Skin in the Game Matter? Director Incentives and Governance in the Mutual Fund Industry," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 44(06), pages 1345-1373, December.
- Rüdiger FAHLENBRACH & René M. STULZ, .
"Bank CEO Incentives and the Credit Crisis,"
Swiss Finance Institute Research Paper Series
09-27, Swiss Finance Institute.
- Fahlenbach, Rudiger & Stulz, Rene M., 2009. "Bank CEO Incentives and the Credit Crisis," Working Paper Series 2009-13, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
- Rüdiger Fahlenbrach & René M. Stulz, 2009. "Bank CEO Incentives and the Credit Crisis," NBER Working Papers 15212, National Bureau of Economic Research, Inc.
- Khorana, Ajay & Servaes, Henri & Wedge, Lei, 2007.
"Portfolio manager ownership and fund performance,"
Journal of Financial Economics,
Elsevier, vol. 85(1), pages 179-204, July.
- Ferris, Stephen P. & Yan, Xuemin (Sterling), 2007. "Do independent directors and chairmen matter? The role of boards of directors in mutual fund governance," Journal of Corporate Finance, Elsevier, vol. 13(2-3), pages 392-420, June.
- Demsetz, Harold & Villalonga, Belen, 2001. "Ownership structure and corporate performance," Journal of Corporate Finance, Elsevier, vol. 7(3), pages 209-233, September.
- Jonathan B. Berk & Richard C. Green, 2004.
"Mutual Fund Flows and Performance in Rational Markets,"
Journal of Political Economy,
University of Chicago Press, vol. 112(6), pages 1269-1295, December.
- Jonathan B. Berk & Richard C. Green, 2002. "Mutual Fund Flows and Performance in Rational Markets," NBER Working Papers 9275, National Bureau of Economic Research, Inc.
- Jonathan B. Berk & Richard C. Green, 2002. "Mutual Fund Flows and Performance in Rational Markets," FAME Research Paper Series rp100, International Center for Financial Asset Management and Engineering.
- Robert H. Topel & Finis Welch, 1986.
"Efficient Labor Contracts with Employmeny Risk,"
UCLA Economics Working Papers
399, UCLA Department of Economics.
- Joshua M. Pollet & Mungo Wilson, 2008. "How Does Size Affect Mutual Fund Behavior?," Journal of Finance, American Finance Association, vol. 63(6), pages 2941-2969, December.
- Dewatripont, Mathias, 1989.
"Renegotiation and Information Revelation over Time: The Case of Optimal Labor Contracts,"
The Quarterly Journal of Economics,
MIT Press, vol. 104(3), pages 589-619, August.
- Mathias Dewatripont, 1989. "Renegotiation and information revelation over time: the case of optimal labor contacts," ULB Institutional Repository 2013/9573, ULB -- Universite Libre de Bruxelles.
- Heber Farnsworth & Jonathan Taylor, 2006. "Evidence On The Compensation Of Portfolio Managers," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 29(3), pages 305-324.
- Bengt Holmstrom, 1980.
"Equilibrium Long-Term Labor Contracts,"
414R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Flannery, Mark J. & Hankins, Kristine Watson, 2013. "Estimating dynamic panel models in corporate finance," Journal of Corporate Finance, Elsevier, vol. 19(C), pages 1-19.
- Fu, Richard & Wedge, Lei, 2011. "Managerial ownership and the disposition effect," Journal of Banking & Finance, Elsevier, vol. 35(9), pages 2407-2417, September.
- Allison L. Evans, 2008. "Portfolio Manager Ownership and Mutual Fund Performance," Financial Management, Financial Management Association International, vol. 37(3), pages 513-534, 09.
- Judith Chevalier & Glenn Ellison, 1996.
"Are Some Mutual Funds Managers Better Than Others? Cross-Sectional Patterns in Behavior and Performance,"
NBER Working Papers
5852, National Bureau of Economic Research, Inc.
- Judith Chevalier & Glenn Ellison, 1999. "Are Some Mutual Fund Managers Better Than Others? Cross-Sectional Patterns in Behavior and Performance," Journal of Finance, American Finance Association, vol. 54(3), pages 875-899, 06.
- Lakonishok, Josef & Lee, Inmoo, 2001. "Are Insider Trades Informative?," Review of Financial Studies, Society for Financial Studies, vol. 14(1), pages 79-111.
- Ulrike Malmendier & Geoffrey Tate, 2004.
"CEO Overconfidence and Corporate Investment,"
NBER Working Papers
10807, National Bureau of Economic Research, Inc.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 293-315, January.
- Qi Chen & Itay Goldstein & Wei Jiang, 2008. "Directors' Ownership in the U.S. Mutual Fund Industry," Journal of Finance, American Finance Association, vol. 63(6), pages 2629-2677, December.
- McConnell, John J. & Servaes, Henri, 1990. "Additional evidence on equity ownership and corporate value," Journal of Financial Economics, Elsevier, vol. 27(2), pages 595-612, October.
- Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-77, December.
When requesting a correction, please mention this item's handle: RePEc:wes:weswpa:2013-005. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Manolis Kaparakis)
If references are entirely missing, you can add them using this form.