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Do Past Performance and Past Cash Flows Explain Current Cash Flows into Retail Superannuation Funds in Australia?

Author

Listed:
  • Angela Frino

    (Faculty of Economics and Commerce, School of Finance and Applied Statistics, ANU, ACT, 0200.)

  • Richard Heaney

    (School of Economics and Finance, Business, RMIT University, Level 12, 239 Bourke Street, Melbourne, VIC, 3000.)

  • David Service

    (Faculty of Economics and Commerce, School of Finance and Applied Statistics, ANU, ACT, 0200.)

Abstract

This paper examines the link between current-quarter cash flows and both past performance and past cash flows using a sample of Australian retail superannuation fund data (managed growth and managed stable) drawn from the period 1994 to 2000. This is a rapidly growing sector within the superannuation industry and it reflects investment behaviour of smaller investors rather than institutions and large corporations. Using both the Gruber (1996) approach and panel-data analysis we find a positive relationship between past performance and current-quarter cash flows as well as evidence of persistence in cash flows over time. Panel-data analysis also identifies a positive relationship between current net cash flows and past performance and cash inflows as well as a negative relationship between current net cash flows and past outflows. Market-wide growth in the retail superannuation sector over the study period does not appear to be driving these results.

Suggested Citation

  • Angela Frino & Richard Heaney & David Service, 2005. "Do Past Performance and Past Cash Flows Explain Current Cash Flows into Retail Superannuation Funds in Australia?," Australian Journal of Management, Australian School of Business, vol. 30(2), pages 229-244, December.
    • Handle: RePEc:sae:ausman:v:30:y:2005:i:2:p:229-244
    DOI: 10.1177/031289620503000203
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    References listed on IDEAS

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