Monitoring Style Drift: Evidence from Equity Funds

45 Pages Posted: 16 Dec 2011

See all articles by Meinanda Kurniawan

Meinanda Kurniawan

Queensland University of Technology - School of Economics and Finance

Janice C. Y. How

Queensland University of Technology; Financial Research Network (FIRN)

Peter Verhoeven

Queensland University of Technology - QUT Business School; Financial Research Network (FIRN)

Date Written: December 16, 2011

Abstract

This paper provides the first evidence that the quality of fund stewardship matters to fund style drift. Based on 435 equity funds from 2008 to 2011, we find a negative association between overall stewardship and the holding-based measure of style consistency and style dispersion in the size dimension. In comparison, stewardship component measures, including fees, regulatory history, manager compensation, manager ownership, board quality, and corporate culture are more significant in explaining the various dimensions of style drift we explored. Our analysis shows that managerial compensation and ownership have opposing effects on style drift and should therefore be treated separately in tests of fund stewardship.

Keywords: fund stewardship, mutual funds, style drift, Morningstar

JEL Classification: G34, G23

Suggested Citation

Kurniawan, Meinanda and How, Janice C. Y. and Verhoeven, Peter, Monitoring Style Drift: Evidence from Equity Funds (December 16, 2011). 2012 Financial Markets & Corporate Governance Conference. Available at SSRN: https://ssrn.com/abstract=1973432 or http://dx.doi.org/10.2139/ssrn.1973432

Meinanda Kurniawan (Contact Author)

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

Janice C. Y. How

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Peter Verhoeven

Queensland University of Technology - QUT Business School ( email )

GPO Box 2434
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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