Premium
What Drives Portfolio Pumping in the K orean Equity Fund Market?
Author(s) -
Lee Jinho,
Baek Kang,
Park Young S.
Publication year - 2014
Publication title -
asia‐pacific journal of financial studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.375
H-Index - 15
eISSN - 2041-6156
pISSN - 2041-9945
DOI - 10.1111/ajfs.12048
Subject(s) - portfolio , business , finance , fund of funds , equity (law) , private equity fund , target date fund , market liquidity , feeder fund , fund administration , sovereign wealth fund , income fund , open end fund , private equity , economics , microeconomics , institutional investor , corporate governance , political science , law , incentive
This paper analyzes whether portfolio pumping by fund managers is widespread in the K orean equity fund market, and identifies the factors encouraging this behavior. The study results demonstrate that (i) fund managers are tempted to distort fund performance through portfolio pumping at year‐end (when their achievement is evaluated); (ii) this manipulation occurs more actively in small funds and those with good past performance; (iii) portfolio pumping is observed more in products of foreign or small‐sized asset management companies; and (iv) although statistically less significant, fund managers are tempted to undertake price manipulation when their holdings have low liquidity.