New mutual fund managers: Why do they alter portfolios?

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

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)


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
Issue number6
Publication statusPublished - 2016 Jun 1


  • FsQCA
  • Fund Managers
  • Management Turnover
  • Performance

ASJC Scopus subject areas

  • Marketing


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