Publication Type
Working Paper
Version
publishedVersion
Publication Date
11-2014
Abstract
We study the effect of portfolio manager ownership, that is, “skin in the game”, on the risk taking of mutual funds. Using a holdings-based risk-shifting measure and a difference-indifferences approach, we find that managers with greater ownership engage in less risk-shifting behavior. We also find that managers with higher ownership exhibit superior reward-to-risk (i.e., Sharpe and appraisal) ratios. Funds with greater managerial ownership attract more capital flows. Taken together, our findings indicate that managerial ownership reduces managers’ incentive to engage in risk-shifting behavior and increases shareholder wealth.
Keywords
Mutual Funds, Portfolio Manager Ownership, Risk Shifting
Discipline
Finance and Financial Management
Research Areas
Finance
Citation
Ma, Linlin and TANG, Yuehua.
Portfolio Manager Ownership and Mutual Fund Risk Taking. (2014).
Available at: https://ink.library.smu.edu.sg/lkcsb_research/4546
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.