An Analysis of the Determinants and Shareholder Wealth Effects of Mutual Fund Mergers | Zendy

Jayaraman Narayanan | Zendy; Khorana Ajay | Zendy; Nelling Edward | Zendy

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An Analysis of the Determinants and Shareholder Wealth Effects of Mutual Fund Mergers

Author(s) -

Jayaraman Narayanan,

Khorana Ajay,

Nelling Edward

Publication year - 2002

Publication title -

the journal of finance

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 18.151

H-Index - 299

eISSN - 1540-6261

pISSN - 0022-1082

DOI - 10.1111/1540-6261.00468

Subject(s) - shareholder , mutual fund , business , target date fund , sovereign wealth fund , fund administration , income fund , open end fund , asset (computer security) , finance , investment fund , financial system , accounting , economics , institutional investor , corporate governance , foreign direct investment , computer security , market liquidity , computer science , macroeconomics

This study examines the determinants of mutual fund mergers and their subsequent wealth impact on shareholders of target and acquiring funds. Results indicate significant improvements in postmerger performance and a reduction in expense ratios for target fund shareholders. In contrast, acquiring fund shareholders experience a significant deterioration in postmerger performance. The net asset flows continue to remain negative for the combined fund in the year following the merger. The likelihood of a fund merger is inversely related to fund size for both within‐and across‐family mutual fund mergers. However, poor past performance is a significant determinant for only within‐family mergers.

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