Managerial investment in mutual funds: Determinants and performance implications

Abigail Hornstein and James Hounsell
Additional contact information
James Hounsell: Centerstone Investors, New York

No 2016-004, Wesleyan Economics Working Papers from Wesleyan University, Department of Economics

Abstract: We examine the determinants of managerial investments in mutual funds and the subsequent impacts of these investments on fund performance. By using panel data we show thatinvestment levels fluctuate within funds over time, contrary to the common assumptionthat cross-sectional data are representative. Managerial investments reflect personal portfolio considerations while also signaling incentive alignment with investors. The impactof managerial investment on performance varies by whether the fund is solo- or team-managed. Fund performance is higher for solo-managed funds and lower for team-managedfunds when managers invest more. These results are consistent with the higher visibility ofsolo managers, and less extreme investment returns of team-managed funds. Our resultssuggest investors may not benefit from all managerial signals of incentive alignment asmanagerial investments also reflect personal portfolio considerations.

Keywords: Mutual funds; Managerial ownership; Fund performance; Team management (search for similar items in EconPapers)
JEL-codes: G29 G32 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2016-06
New Economics Papers: this item is included in nep-bec and nep-hrm
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Published Journal of Economics and Business 87 (2016) 18–34

Downloads: (external link)
http://dx.doi.org/10.1016/j.jeconbus.2016.05.002 (application/pdf)

Related works:
Journal Article: Managerial investment in mutual funds: Determinants and performance implications (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wes:weswpa:2016-004

Access Statistics for this paper

More papers in Wesleyan Economics Working Papers from Wesleyan University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Manolis Kaparakis ().