Expense Shifting: An Empirical Study of Agency Costs in the Mutual Fund Industry

50 Pages Posted: 1 Feb 1999

See all articles by Nicolaj Siggelkow

Nicolaj Siggelkow

University of Pennsylvania - Management Department

Date Written: January 4, 1999

Abstract

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.

JEL Classification: G23, D23, D82, L14

Suggested Citation

Siggelkow, Nicolaj, Expense Shifting: An Empirical Study of Agency Costs in the Mutual Fund Industry (January 4, 1999). Available at SSRN: https://ssrn.com/abstract=147274 or http://dx.doi.org/10.2139/ssrn.147274

Nicolaj Siggelkow (Contact Author)

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
215-573-7137 (Phone)
215-898-0401 (Fax)

HOME PAGE: http://www-management.wharton.upenn.edu/siggelkow/

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