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Managerial Ownership Changes and Mutual Fund Performance

Author

Listed:
  • Thorsten Martin

    (Bocconi University [Milan, Italy])

  • Florian Sonnenburg

Abstract

We study the dynamics of fund manager ownership for a sample of U.S. equity mutual funds from 2005 to 2011. We find that ownership changes positively predict changes in future risk-adjusted fund performance. A one-standard-deviation increase in ownership predicts a 1.6 percent increase in alpha in the following year. Fund managers who are required to increase their ownership by fund family policy show the strongest increase in alpha. They do so by increasing their trading activity in line with the view that higher ownership aligns interests of managers with those of shareholders and induces higher effort.

Suggested Citation

  • Thorsten Martin & Florian Sonnenburg, 2015. "Managerial Ownership Changes and Mutual Fund Performance," Working Papers hal-02002728, HAL.
    • Handle: RePEc:hal:wpaper:hal-02002728
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    Cited by:

    1. Cici, Gjergji & Hendriock, Mario & Kempf, Alexander, 2022. "Finding your calling: Matching skills with jobs in the mutual fund industry," CFR Working Papers 19-05, University of Cologne, Centre for Financial Research (CFR), revised 2022.

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