Monthly Mutual Fund Portfolio Disclosures and the Efficiency of Portfolio Firms’ Investment Decisions

65 Pages Posted: 25 Oct 2021 Last revised: 23 Aug 2022

See all articles by Kai Du

Kai Du

Pennsylvania State University

Jingzhi Huang

Pennsylvania State University - Department of Finance

Henock Louis

Pennsylvania State University - Smeal College of Business

Phong Truong

Pennsylvania State University

Date Written: September 1, 2021

Abstract

This paper provides evidence that mutual funds’ switches to monthly holding disclosures reduce the efficiency of corporate investments, particularly when the switching funds have large ownership stakes or large position changes in the firm’s stock. Consistent with a crowding-out mechanism, the evidence suggests that monthly portfolio disclosures discourage information production activities by other market participants and, consequently, reduce corporate managers’ ability to learn from prices. This effect increases with managers’ incentives to learn from prices and investors’ potential use of monthly fund disclosures. This study sheds light on the regulatory debate on the efficacy of making monthly holdings disclosures available to the public.

Keywords: Mutual funds, Portfolio holdings, Monthly disclosures, Market feedback, Investment-q sensitivity, Crowding-out

JEL Classification: G11, G14, G18, G23, G31

Suggested Citation

Du, Kai and Huang, Jingzhi and Louis, Henock and Truong, Phong, Monthly Mutual Fund Portfolio Disclosures and the Efficiency of Portfolio Firms’ Investment Decisions (September 1, 2021). Available at SSRN: https://ssrn.com/abstract=3948716 or http://dx.doi.org/10.2139/ssrn.3948716

Kai Du

Pennsylvania State University ( email )

University Park, PA 16802
United States

Jingzhi Huang

Pennsylvania State University - Department of Finance ( email )

University Park, PA 16802
United States

Henock Louis

Pennsylvania State University - Smeal College of Business ( email )

University Park, PA 16802-3306
United States
814-865-4160 (Phone)
814-863-8393 (Fax)

Phong Truong (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States
16802 (Fax)

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