New mutual fund managers

Why do they alter portfolios?

De Wai Chou, Pei Ching Huang, Christine W. Lai

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This study examines why a new fund manager changes the mutual fund holding portfolio of his or her predecessor immediately after management turnover. The study considers three possible explanations: private information, reputation concerns, and grace periods for new managers to sell underperforming stocks. Monthly data for the study come from a unique database of the Securities Investment Trust and Consulting Association in Taiwan over the period from 2004 to 2012. Both the regression models and the fuzzy-set qualitative comparative analysis (fsQCA) confirm that for the one-year period following a change of manager, portfolio turnover contributes to new managers' outperformance of their predecessors, thus supporting the private information hypothesis. However, for the three-month period following a change of manager, causal asymmetry occurs: portfolio turnover can lead to outperformance or underperformance outcomes, supporting the hypotheses of private information and successors' grace period.

Original languageEnglish
Pages (from-to)2167-2175
Number of pages9
JournalJournal of Business Research
Volume69
Issue number6
DOIs
Publication statusPublished - 2016 Jun 1

Fingerprint

Fund managers
Mutual funds
Managers
Private information
Turnover
Data base
Qualitative comparative analysis
Underperformance
Asymmetry
Consulting
Taiwan
Fundholding
Regression model
Fuzzy sets
Investment trusts
Management turnover

Keywords

  • FsQCA
  • Fund Managers
  • Management Turnover
  • Performance

ASJC Scopus subject areas

  • Marketing

Cite this

New mutual fund managers : Why do they alter portfolios? / Chou, De Wai; Huang, Pei Ching; Lai, Christine W.

In: Journal of Business Research, Vol. 69, No. 6, 01.06.2016, p. 2167-2175.

Research output: Contribution to journalArticle

@article{e5875782252849e88d2da82d443d17bd,
title = "New mutual fund managers: Why do they alter portfolios?",
abstract = "This study examines why a new fund manager changes the mutual fund holding portfolio of his or her predecessor immediately after management turnover. The study considers three possible explanations: private information, reputation concerns, and grace periods for new managers to sell underperforming stocks. Monthly data for the study come from a unique database of the Securities Investment Trust and Consulting Association in Taiwan over the period from 2004 to 2012. Both the regression models and the fuzzy-set qualitative comparative analysis (fsQCA) confirm that for the one-year period following a change of manager, portfolio turnover contributes to new managers' outperformance of their predecessors, thus supporting the private information hypothesis. However, for the three-month period following a change of manager, causal asymmetry occurs: portfolio turnover can lead to outperformance or underperformance outcomes, supporting the hypotheses of private information and successors' grace period.",
keywords = "FsQCA, Fund Managers, Management Turnover, Performance",
author = "Chou, {De Wai} and Huang, {Pei Ching} and Lai, {Christine W.}",
year = "2016",
month = "6",
day = "1",
doi = "10.1016/j.jbusres.2015.12.025",
language = "English",
volume = "69",
pages = "2167--2175",
journal = "Journal of Business Research",
issn = "0148-2963",
publisher = "Elsevier Inc.",
number = "6",

}

TY - JOUR

T1 - New mutual fund managers

T2 - Why do they alter portfolios?

AU - Chou, De Wai

AU - Huang, Pei Ching

AU - Lai, Christine W.

PY - 2016/6/1

Y1 - 2016/6/1

N2 - This study examines why a new fund manager changes the mutual fund holding portfolio of his or her predecessor immediately after management turnover. The study considers three possible explanations: private information, reputation concerns, and grace periods for new managers to sell underperforming stocks. Monthly data for the study come from a unique database of the Securities Investment Trust and Consulting Association in Taiwan over the period from 2004 to 2012. Both the regression models and the fuzzy-set qualitative comparative analysis (fsQCA) confirm that for the one-year period following a change of manager, portfolio turnover contributes to new managers' outperformance of their predecessors, thus supporting the private information hypothesis. However, for the three-month period following a change of manager, causal asymmetry occurs: portfolio turnover can lead to outperformance or underperformance outcomes, supporting the hypotheses of private information and successors' grace period.

AB - This study examines why a new fund manager changes the mutual fund holding portfolio of his or her predecessor immediately after management turnover. The study considers three possible explanations: private information, reputation concerns, and grace periods for new managers to sell underperforming stocks. Monthly data for the study come from a unique database of the Securities Investment Trust and Consulting Association in Taiwan over the period from 2004 to 2012. Both the regression models and the fuzzy-set qualitative comparative analysis (fsQCA) confirm that for the one-year period following a change of manager, portfolio turnover contributes to new managers' outperformance of their predecessors, thus supporting the private information hypothesis. However, for the three-month period following a change of manager, causal asymmetry occurs: portfolio turnover can lead to outperformance or underperformance outcomes, supporting the hypotheses of private information and successors' grace period.

KW - FsQCA

KW - Fund Managers

KW - Management Turnover

KW - Performance

UR - http://www.scopus.com/inward/record.url?scp=84961879957&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84961879957&partnerID=8YFLogxK

U2 - 10.1016/j.jbusres.2015.12.025

DO - 10.1016/j.jbusres.2015.12.025

M3 - Article

VL - 69

SP - 2167

EP - 2175

JO - Journal of Business Research

JF - Journal of Business Research

SN - 0148-2963

IS - 6

ER -