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Implications of fund manager turnover in China

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  • Wang, Yaping
  • Ko, Kwangsoo

Abstract

This study investigates the effect of manager turnover on fund returns in China, the largest developing market. Using unique Chinese data, we extend the study of Khorana (2001) by classifying manager turnover as internal relocation, switch to outside mutual fund, switch to hedge fund, and dropout from the fund industry. Among the four types of manager turnover, only dropout shows significantly negative pre-replacement and positive post-replacement excess returns over the benchmark. When a skilled (an unskilled) manager is replaced, post-replacement performance gets worse (better) than pre-replacement performance. A takeover of a fund by an experienced manager is likely to result in better post-replacement performance than takeover by an inexperienced manager.

Suggested Citation

  • Wang, Yaping & Ko, Kwangsoo, 2017. "Implications of fund manager turnover in China," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 99-106.
    • Handle: RePEc:eee:reveco:v:51:y:2017:i:c:p:99-106
    DOI: 10.1016/j.iref.2017.05.004
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    References listed on IDEAS

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    Cited by:

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    3. Wang, Yaping & Paek, Miyoun & Ko, Kwangsoo, 2019. "The performance of Chinese equity funds: An extension of DGTW model," Japan and the World Economy, Elsevier, vol. 51(C), pages 1-1.
    4. Yarovaya, Larisa & Mirza, Nawazish & Abaidi, Jamila & Hasnaoui, Amir, 2021. "Human Capital efficiency and equity funds’ performance during the COVID-19 pandemic," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 584-591.
    5. Dachen Sheng & Heather A. Montgomery, 2024. "Assessing Mutual Fund Performance in China: A Sector Weight-Based Approach," Mathematics, MDPI, vol. 12(16), pages 1-21, August.
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    7. Wang, Yang & Ashton, John K. & Jaafar, Aziz, 2019. "Does mutual fund investment influence accounting fraud?," Emerging Markets Review, Elsevier, vol. 38(C), pages 142-158.
    8. Huang, Ying Sophie & Liang, Bing & Wu, Kai, 2021. "Are mutual fund manager skills transferable to private funds?," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 614-638.

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    More about this item

    Keywords

    Fund manager turnover; Internal relocation; Switch to outside fund; Dropout; China;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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