Investors' Response to Mutual Fund Company Mergers

25 Pages Posted: 16 Aug 2001

See all articles by David E. Allen

David E. Allen

School of Mathematics and Statistics, The University of Sydney; Financial Research Network (FIRN); Department of Finance; School of Business and Law, Edith Cowan University

Jerry T. Parwada

UNSW Australia Business School, School of Banking and Finance; UNSW Business School; Financial Research Network (FIRN)

Date Written: September 2005

Abstract

This paper examines mutual fund investors' response to mergers of Australian mutual fund companies. Findings from two matching-control techniques employed to analyse the impact of mergers on excess money in and out of open and closed funds involved in the transactions suggest that mergers are not accompanied by increased money flows. Instead investors withdraw from the target funds prior to and after the merger. Cross-sectional analyses show that funds belonging to specialist mutual fund companies record more gains in assets under management than declines following mergers, and that money inflow gains at competing funds induce reductions of management expense ratios at target funds.

Keywords: Mutual funds, Investor behaviour, Mergers and acquisitions

JEL Classification: G20, G23, G34

Suggested Citation

Allen, David Edmund and Parwada, Jerry T., Investors' Response to Mutual Fund Company Mergers (September 2005). Available at SSRN: https://ssrn.com/abstract=279348 or http://dx.doi.org/10.2139/ssrn.279348

David Edmund Allen (Contact Author)

School of Mathematics and Statistics, The University of Sydney ( email )

School of Mathematics and Statistics F07
University of Sydney
Sydney, New South Wales 2006
Australia

HOME PAGE: http://www.maths.usyd.edu.au

Financial Research Network (FIRN)

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

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

Department of Finance ( email )

Taiwan
Taiwan

School of Business and Law, Edith Cowan University

100 Joondalup Drive
Joondalup, WA 6027
Australia

HOME PAGE: http://www.dallenwapty.com

Jerry T. Parwada

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Financial Research Network (FIRN)

UNSW
Sydney, NSW 2052
Australia

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

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