Working Paper: CEPR ID: DP10329
Authors: Steven Gallaher; Ron Kaniel; Laura Starks
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.
Keywords: advertising; flow; mutual fund; performance
JEL Codes: G11; G23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| advertising expenditures (M37) | mutual fund flows (G23) |
| advertising expenditures (M37) | net flows (F21) |
| advertising expenditures (M37) | redemptions (G35) |
| advertising expenditures (M37) | flow-performance sensitivity (C69) |
| flow-performance sensitivity (C69) | net flows (F21) |