Spillover Effects in Mutual Fund Companies

75 Pages Posted: 15 Aug 2011

See all articles by Clemens Sialm

Clemens Sialm

University of Texas at Austin - McCombs School of Business; National Bureau of Economic Research (NBER)

T. Mandy Tham

Nanyang Technological University (NTU); Singapore Management University - Lee Kong Chian School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: August 15, 2011

Abstract

In our project we investigate the spillover effects across different business segments of publicly traded mutual fund management companies. We study whether 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. We hypothesize that mutual funds managed by poorly performing firms experience unexpectedly low flows of new money and exhibit a significantly higher attrition of talented fund managers even if the mutual funds themselves performed well. Our project helps us to understand whether the financial health of a diversified firm has a significant impact on the prospects of the various business segments. Our research also allows us to estimate the economic costs of financial distress, which have been difficult to quantify in the corporate finance literature. Our research provides a deeper understanding of the impact of the performance of mutual fund management companies on their customers (fund investors) and their employees (fund managers) and therefore is of significant practical relevance.

Keywords: Mutual Fund Flows, Conglomerates, Financial Distress

JEL Classification: G20, G23

Suggested Citation

Sialm, Clemens and Tham, Tze-Minn and Tham, Tze-Minn, Spillover Effects in Mutual Fund Companies (August 15, 2011). Available at SSRN: https://ssrn.com/abstract=1910289 or http://dx.doi.org/10.2139/ssrn.1910289

Clemens Sialm (Contact Author)

University of Texas at Austin - McCombs School of Business ( email )

Austin, TX 78712
United States

HOME PAGE: http://faculty.mccombs.utexas.edu/Clemens.Sialm/

National Bureau of Economic Research (NBER)

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Tze-Minn Tham

Singapore Management University - Lee Kong Chian School of Business ( email )

50 Stamford Road
Singapore 178899
Singapore

Nanyang Technological University (NTU) ( email )

S3 B1b-61 Nanyang Avenue
Singapore, 639798
Singapore
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