Asset Management and Financial Conglomerates: Attention through Stellar Portfolios
50 Pages Posted: 15 May 2016 Last revised: 22 Mar 2018
Date Written: March 19, 2018
This paper provides evidence that stock returns of financial conglomerates are affected by how successful certain funds of its asset management division are. The results indicate a positive spillover effect between fund families with top-performing funds and the stock returns of the parent company. Star funds are positively related to Internet searches, analyst coverage, and trading volume, suggesting that the boost on returns is due not only to an increase in fee revenues accruing to the funds but also from an increase in firm visibility. Additional analyses suggest that managers tend to opportunistically adjust the odds of having star funds to exploit the temporary return effect. These findings appear to provide support for the increase in mergers and acquisitions activity in the asset management industry.
Keywords: Investor Attention, Stock Prices, Mutual Fund, Asset Management, Star Funds, Financial Distress, Managerial Behavior, Corporate Events
JEL Classification: G12, G21, G24, M37
Suggested Citation: Suggested Citation