Price Support by Bank-Affiliated Mutual Funds

76 Pages Posted: 2 Aug 2010 Last revised: 23 Mar 2016

See all articles by Benjamin Golez

Benjamin Golez

University of Notre Dame

Jose M. Marin

Charles III University of Madrid

Date Written: May 1, 2014


Fund managers are double agents; they serve both fund investors and owners of management firms. This conflict of interest may result in trading to support securities prices. Tests of this hypothesis in the Spanish mutual fund industry indicate that bank-affiliated mutual funds systematically increase their holdings in the controlling bank stock around seasoned equity issues, at the time of bad news about the controlling bank, before anticipated price drops, and after non-anticipated price drops. The results seem mainly driven by bank managers’ incentives. Ownership of asset management companies thus matters and can distort capital allocation and asset prices.

Keywords: Price support, conflict of interests, mutual funds, banks, secondary offerings

JEL Classification: G30, G23, G32, G28, G21, K22

Suggested Citation

Golez, Benjamin and Marin, Jose M., Price Support by Bank-Affiliated Mutual Funds (May 1, 2014). AFA 2012 Chicago Meetings Paper, Journal of Financial Economics (115), 2015, Available at SSRN: or

Benjamin Golez

University of Notre Dame ( email )

256 Mendoza College of Business
Notre Dame, IN 46556-5646
United States
(574) 631-1458 (Phone)


Jose M. Marin (Contact Author)

Charles III University of Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903


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