Investors' response to mutual fund company mergers
Document Type
Journal Article
Publisher
Emerald Group Publishing Limited
Faculty
Faculty of Business and Law
School
School of Accounting, Finance and Economics
RAS ID
5146
Abstract
Purpose – This paper aims to examine mutual fund investors' response to mergers of Australian mutual fund companies. Design/methodology/approach – Two matching-control techniques are employed to analyse the impact of mergers on excess money in and out of open and closed funds involved in the transactions. The paper employs cross-sectional regression analyses to examine the impact of mergers on different types of parties to mergers. Findings – The results suggest that mergers are not accompanied by increased money flows. Instead investors withdraw from the target funds prior to and after the merger. Funds belonging to specialist mutual fund companies record more gains in assets under management than declines following mergers, and that money inflow gains at competing funds induce reductions of management expense ratios at target funds. Research limitations/implications – This paper studies mergers in only one industry in a single country. Future studies may extend to other industries and economies. Originality/value – This paper extends prior research on the flow effects of mergers at individual fund level by considering the issue at the corporate level.
DOI
10.1108/17439130610657340
Comments
Allen, D. E., & Parwada, J. T. (2006). Investors' response to mutual fund company mergers. International Journal of Managerial Finance, 2(2), 121-135. Available here