Journal of Financial Economics Vol. 103 No. 2 2012
Disclosure and agency conflict: Evidence from mutual fund commission bundling
Abstract
This study provides empirical evidence on the role of disclosure in resolving agency conflicts in delegated investment management. For certain expenditures, fund managers have alternative means of payment which differ greatly in their opacity: payments can be expensed (relatively transparent); or bundled with brokerage commissions (relatively opaque). We find that the return impact of opaque payments is significantly more negative than that of transparent payments. Moreover, we find a differential flow reaction that confirms the opacity of commission bundling. Collectively, our results demonstrate the importance of transparency in addressing agency costs of delegated investment management.
- DOI
- 10.1016/j.jfineco.2011.09.007
- Volume
- 103
- Issue
- 2
- Pages
- 308-326
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref