Review of Financial Studies Vol. 34 No. 1 2021
Portfolio Pumping and Managerial Structure
Abstract
Using U.S. equity mutual fund data, we show that portfolio pumping—an illegal trading activity that artificially inflates year- and quarter-end portfolio returns—is more pronounced among single-managed funds compared with team-managed ones. The return inflation by team-managed funds is 45% lower than by single-managed funds at year-ends. Also, portfolio pumping decreases as team size increases. These results are driven by peer effects among teams and, sometimes, amplified by less convex flow-performance relation in team-managed funds. Our findings are robust to differences in fund governance, manager career concerns, local networks, fund family policies, and changes in the SEC’s enforcement policies.
- DOI
- 10.1093/rfs/hhaa027
- Volume
- 34
- Issue
- 1
- Pages
- 194-226
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref