Competition and Cooperation in Mutual Fund Families

73 Pages Posted: 15 Jun 2017 Last revised: 2 Apr 2019

See all articles by Richard B. Evans

Richard B. Evans

University of Virginia - Darden School of Business

Melissa Porras Prado

Nova School of Business and Economics

Rafael Zambrana

Nova School of Business and Economics

Date Written: April 2, 2019

Abstract

Using manager compensation disclosure and intra-family manager cooperation measures, we create indices of family-level competitive/cooperative incentives. Families that encourage cooperation among their managers are more likely to engage in coordinated behavior (e.g., cross-trading, cross-holding) and have less volatile cash flows. Families with competitive incentives generate higher performing funds, a higher fraction of "star" funds, but greater performance dispersion across funds. In examining the determinants of incentive schemes, competitive families are more likely to manage institutional money, and cooperative families are more likely to distribute through brokers, consistent with retail demand for nonperformance characteristics.

Keywords: Mutual fund, manager, compensation, incentives, competition, cooperation, cross-holding, performance, cross-subsidization, internal capital markets

JEL Classification: G11, G23, J33, J44, L22, L25, L84, M12, M52

Suggested Citation

Evans, Richard B. and Porras Prado, Melissa and Zambrana, Rafael, Competition and Cooperation in Mutual Fund Families (April 2, 2019). Journal of Financial Economics (JFE), Forthcoming; Darden Business School Working Paper No. 2986304. Available at SSRN: https://ssrn.com/abstract=2986304 or http://dx.doi.org/10.2139/ssrn.2986304

Richard B. Evans

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4030 (Phone)
434-243-7680 (Fax)

HOME PAGE: http://faculty.darden.virginia.edu/evansr/

Melissa Porras Prado

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

Rafael Zambrana (Contact Author)

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, Lisbon 1099-032
Portugal

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