Managerial Multitasking in the Mutual Fund Industry
41 Pages Posted: 16 Jan 2011 Last revised: 11 Apr 2018
Date Written: May 23, 2012
Abstract
We examine the determinants and consequences of the multitasking phenomenon in the mutual fund industry where fund managers simultaneously manage multiple funds. We show that well-performing managers multitask either by taking over poorly performing funds within fund companies (i.e., acquired funds) or by launching new funds. We find that funds managed by managers prior to multitasking (i.e., incumbent funds) experience significant performance deterioration subsequent to multitasking while the performance of the acquired funds improves. Although there is no change in the investor flows into the incumbent funds, the acquired funds and new funds attract greater investor flows. As a result, multitasking arrangement increases the assets of fund companies. Taken together, these findings are indicative of potential agency problems associated with managerial multitasking.
Keywords: Multitasking, Fund Performance, Fund Flows, Agency Problems
JEL Classification: G10, G20, G23
Suggested Citation: Suggested Citation
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