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Horses for Courses: Fund Managers and Organizational StructuresYufeng HanUniversity of Colorado at Denver - Business School Thomas H. NoeUniversity of Oxford - Said Business School; University of Oxford - Balliol College; European Corporate Governance Institute Michael J. RebelloUniversity of Texas at Dallas - Naveen Jindal School of Management March 9, 2012 Abstract: We model and test the relations between the team management of mutual funds, fund manager ability, fund performance, and holdings. Our model predicts that team-managed funds will perform better, allocate their funds more conservatively, and trade less aggressively than single-manager funds. However, high ability managers will rationally self-select into single-manager funds. Consistent with the model's prediction we find that team-managed funds outperform single-manager funds with the same characteristics by 23 to 38 basis point a year. This superior performance is only discernible once we control for the endogenous self-selection of managers. Also consistent with the model's predictions, we find that team-managed funds deviate less from their benchmark allocations and trade less aggressively in response to changes in sell-side analyst recommendations.
Number of Pages in PDF File: 58 Keywords: Team Management, Fund Performance, Fund Holdings, Self Selection JEL Classification: G29 working papers seriesDate posted: March 20, 2012Suggested CitationContact Information
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