Advertising and Mutual Funds: From Families to Individual Funds

52 Pages Posted: 23 Jan 2015

See all articles by Steven T Gallaher

Steven T Gallaher

Southern New Hampshire University

Ron Kaniel

University of Rochester - Simon Business School; CEPR

Laura T. Starks

University of Texas at Austin - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: January 2015

Abstract

We find that advertising appears to have significant effects on investor flows at the industry, family and individual fund level. At the industry level, flows are higher in months with more advertising dollars spent, even for non-advertising families. At the family level, flows have a convex relation with advertising expenditures, similar to that for performance, with a significant positive effect for high relative advertisers only. At the individual fund level, advertising stems redemptions rather than increasing purchases of fund shares. We further find that advertising can affect the fund's flow-performance sensitivity, dampening it for poorly performing funds and increasing it for highly performing funds.

Keywords: advertising, flow, mutual fund, performance

JEL Classification: G11, G23

Suggested Citation

Gallaher, Steven T and Kaniel, Ron and Starks, Laura T., Advertising and Mutual Funds: From Families to Individual Funds (January 2015). CEPR Discussion Paper No. DP10329. Available at SSRN: https://ssrn.com/abstract=2554403

Steven T Gallaher (Contact Author)

Southern New Hampshire University ( email )

2500 North River Road
Manchester, NH 03103
United States

Ron Kaniel

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

HOME PAGE: http://rkaniel.simon.rochester.edu

CEPR ( email )

London
United Kingdom

Laura T. Starks

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-471-5899 (Phone)
512-471-5073 (Fax)

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