Working Paper: NBER ID: w17292
Authors: Clemens Sialm; T Mandy Tham
Abstract: Our paper investigates spillover effects across different business segments of publicly traded mutual fund management companies. We find that the prior stock price performance of the management company has a significant impact on the money flows and the management turnover of the affiliated mutual funds. Mutual funds managed by poorly performing firms experience unexpectedly low flows of new money and exhibit a significantly higher attrition of fund managers even if the mutual funds themselves performed well. Our results remain strong for companies where mutual funds account for only a small fraction of the overall revenues and hold for both equity and bond mutual funds. These results indicate that the financial health of a diversified firm has a significant impact on the prospects of the various business segments.
Keywords: mutual funds; spillover effects; management performance; fund flows; manager turnover
JEL Codes: G11; G23; G30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Prior stock price performance of management companies (G34) | Money flows into affiliated mutual funds (G23) |
| Management company performance (L25) | Management turnover (M51) |
| Management company performance (L25) | Subsequent performance of affiliated mutual funds (G23) |
| Money flows into affiliated mutual funds (G23) | Subsequent performance of affiliated mutual funds (G23) |