Mutual Funds’ Reporting Frequency and Firms' Share Repurchases

54 Pages Posted: 14 May 2020 Last revised: 8 Nov 2022

See all articles by Thomas Bourveau

Thomas Bourveau

Columbia University - Columbia Business School, Accounting, Business Law & Taxation

Xinlei Li

Hong Kong University of Science and Technology

Daniele Macciocchi

University of Miami Herbert Business School

Chengzhu Sun

The Hong Kong Polytechnic University

Date Written: September 1, 2019

Abstract

We examine a regulatory change that increased the reporting frequency of mutual funds' portfolios. Using a difference-in-differences design, we find that firms with greater ownership of mutual funds increase share repurchases following the regulatory change. We show that these share repurchases are a firm's rational response to undervaluation, which occurs because fund managers become shortsighted following the regulation and sell companies with good long-term prospects. Collectively, our results shed light on an unintended consequence of more frequent reporting in a delegated asset management framework.

Keywords: Myopia, Reporting frequency, Share repurchases, Mutual funds

JEL Classification: G23, G28, G30, G31, M40, M41

Suggested Citation

Bourveau, Thomas and Li, Xinlei and Macciocchi, Daniele and Sun, Chengzhu, Mutual Funds’ Reporting Frequency and Firms' Share Repurchases (September 1, 2019). Available at SSRN: https://ssrn.com/abstract=3584004 or http://dx.doi.org/10.2139/ssrn.3584004

Thomas Bourveau

Columbia University - Columbia Business School, Accounting, Business Law & Taxation ( email )

3022 Broadway
New York, NY 10027
United States

Xinlei Li

Hong Kong University of Science and Technology ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

Daniele Macciocchi (Contact Author)

University of Miami Herbert Business School ( email )

P.O. Box 248126
Florida
Coral Gables, FL 33124
United States

Chengzhu Sun

The Hong Kong Polytechnic University ( email )

M849, 8/F Li Ka Shing Tower
Hung Hom
Kowloon, 999999
Hong Kong

HOME PAGE: http://https://af.polyu.edu.hk/people/academic-staff/dr-chengzhu-sun/

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