Expense Shifting: An Empirical Study of Agency Costs in the Mutual Fund Industry
University of Pennsylvania - Management Department
January 4, 1999
Using a data set comprising almost all equity and bond funds in existence in 1996, we find that fund providers shift advertising and distribution expenses--via so-called 12b-1 fees onto fund shareholders. It is further shown that bond funds with 12b-1 fees are more risky, while having similar returns, than bond funds without 12b-1 fees. Lastly, we find that fund providers shift part of their research expenses onto fund shareholders by generating soft dollars (rebates in form of research services provided by brokers in return for excess commissions paid by fund providers) and not reducing explicit fees.
Number of Pages in PDF File: 50
JEL Classification: G23, D23, D82, L14working papers series
Date posted: February 1, 1999
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