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Benefits of Partial vs Full Mandatory Mutual Fund Disclosure

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Listed:
  • Kaniel, Ron
  • Li, Jennifer
  • Shi, Donghui
  • Qi, Zhang

Abstract

We study implications of partial versus full disclosure requirements on mutual fund trading and performance, by exploiting a unique hybrid disclosure policy in China, requiring full disclosure at a semi-annual frequency, but only disclosure of top-10 holdings at other quarters. Under partial disclosure, funds benefit from strategically concealing private information. Fund holdings outperform those under full disclosure by 3% over the following three months. Partial disclosure reduces window dressing distortions, doesn’t deteriorate market liquidity nor fund portfolios’ risk profiles. Together, the evidence suggests that not only a disclosure requirement, but its extent, is an important dimension of policy to consider.

Suggested Citation

  • Kaniel, Ron & Li, Jennifer & Shi, Donghui & Qi, Zhang, 2023. "Benefits of Partial vs Full Mandatory Mutual Fund Disclosure," CEPR Discussion Papers 18565, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:18565
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    More about this item

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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