Leveling the Playing field? the Effect of Disclosing Fund Manager Activeness to Individual Investors

Journal of Banking and Finance, Available online 4 June 2023, 106915 https://doi.org/10.1016/j.jbankfin.2023.106915

62 Pages Posted: 9 Mar 2022 Last revised: 14 Jun 2023

See all articles by Dominik Scheld

Dominik Scheld

University of Marburg | Behavioral Finance Research Group

Oscar Anselm Stolper

University of Marburg | Behavioral Finance Research Group

Date Written: March 4, 2022

Abstract

As of April 2018, several of the largest U.S. mutual fund firms have been imposed to disclose a measure of fund manager activeness to retail investors. We evaluate the effectiveness of this intervention. We find that, even for those funds with a large overlap of holdings with the benchmark, no measurable effort to increase management activeness can be observed subsequent to the imposed disclosure. By contrast, investors strongly respond to the intervention. However, an analysis of investor reaction suggests that they do not rationally trade on the newly available information. We discuss our results and propose potential disclosure improvements.

Keywords: Mutual fund manager activeness, investor protection, disclosure effectiveness, regulation, retail finance

JEL Classification: D12, D18, G18, G41

Suggested Citation

Scheld, Dominik and Stolper, Oscar Anselm, Leveling the Playing field? the Effect of Disclosing Fund Manager Activeness to Individual Investors (March 4, 2022). Journal of Banking and Finance, Available online 4 June 2023, 106915 https://doi.org/10.1016/j.jbankfin.2023.106915, Available at SSRN: https://ssrn.com/abstract=4049792 or http://dx.doi.org/10.2139/ssrn.4049792

Dominik Scheld (Contact Author)

University of Marburg | Behavioral Finance Research Group ( email )

Am Plan 1
Marburg, 35032
Germany

Oscar Anselm Stolper

University of Marburg | Behavioral Finance Research Group ( email )

Am Plan 1
Marburg, 35032
Germany

HOME PAGE: http://https://www.uni-marburg.de/de/fb02/professuren/bwl/behavioralfinance

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