This study examines how the composition of an investment adviser's client base (identified via Form ADV filings) relates to the performance of its mutual funds. Investment advisers catering to institutional clients realize statistically and economically superior risk-adjusted mutual fund performance relative to retail-oriented advisers. Subsequent tests identify the channel(s) responsible for the relationship. The evidence is consistent with both a governance mechanism (i.e., Evans and Fahlenbrach 2012) as well as inefficiencies stemming from the costly search mechanism of Gârleanu and Pedersen's (2018) model for asset management. The results suggest that institutional clients can identify better performing investment managers, particularly in market segments where retail mutual fund investors face higher search costs.

This study investigates the nature and magnitude of abuse in the Paycheck Protection Program (PPP or the Program) using PPP loans made to 2999 investment advisory firms registered with the U.S. Securities and Exchange Commission (SEC). The data suggest that PPP abuse was relatively widespread as approximately 25% of firms receiving PPP loans indicated they would retain more jobs in their loan application than the number of employees they disclosed on their most recent regulatory filing (Form ADV). We show an existing model of investment advisor fraud predicts the most egregious PPP loans at a rate similar to actual cases of fraud. Investment advisors abusing the Program were significantly more likely to disclose a history of past fraud and other legal and/or regulatory misconduct. Using a conservative approach, we estimate that more than 6% of the $590 million in PPP funds received by SEC registered investment advisors consisted of overallocations to firms abusing the Program. We test a variety of hypotheses to shed further light on the nature of PPP abuse.

Investment advisors to mutual funds often operate investment vehicles, such as separate accounts and private funds, in addition to managing mutual funds. This study investigates tax consequences for mutual fund shareholders subject to these arrangements. We find investment advisors with a greater presence of tax-exempt separate account clients (SAs) pass through capital gains distributions that place a significantly greater tax burden on shareholders of their mutual funds. Tax implications for mutual funds are most pronounced when managers have strong fee-based incentives to cater to tax-exempt SAs. Performance analyses of mutual funds managed by advisors with tax-exempt SAs suggest that before-tax outperformance compensates shareholders for the additional tax liabilities incurred.