The Exclamation Mark of Cain: Risk Salience and Mutual Fund Flows

62 Pages Posted: 27 Dec 2018 Last revised: 29 Jun 2020

See all articles by Yevgeny Mugerman

Yevgeny Mugerman

Bar Ilan University

Nadav Steinberg

Bank of Israel - Research Department

Zvi Wiener

Hebrew University of Jerusalem - Jerusalem School of Business Administration

Date Written: June 28, 2020

Abstract

We study a regulation that increased mutual funds' risk salience through name change. Using daily fund flow data and several identification strategies, we find that requiring certain fixed income mutual funds to affix an exclamation mark ("!") to their names caused a statistically and economically significant decline in their net flows, with a larger effect on fund inflows than outflows. The exclamation mark’s impact stems from retail investors, both those that seek financial advice and those that invest independently. Mutual funds “defamed” by the exclamation mark designation actually increased their exposure to the particular risk highlighted by the regulator.

Keywords: Mutual Funds, Regulation, Investor Attention, Investor Protection

JEL Classification: G18, G28, G23, G41

Suggested Citation

Mugerman, Yevgeny and Steinberg, Nadav and Wiener, Zvi, The Exclamation Mark of Cain: Risk Salience and Mutual Fund Flows (June 28, 2020). Available at SSRN: https://ssrn.com/abstract=3298856 or http://dx.doi.org/10.2139/ssrn.3298856

Yevgeny Mugerman (Contact Author)

Bar Ilan University ( email )

Ramat Gan
5290002
Israel

Nadav Steinberg

Bank of Israel - Research Department ( email )

PO Box 780
Jerusalem 91007
Israel

Zvi Wiener

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Mount Scopus
Jerusalem, 91905
Israel
(972)-2-588-3049 (Phone)
(972)-2-588-3105 (Fax)

HOME PAGE: http://pluto.mscc.huji.ac.il/~mswiener/zvi.html

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
43
Abstract Views
841
PlumX Metrics