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

Narayanan Jayaraman, Ajay Khorana and Edward Nelling

Journal of Finance, 2002, vol. 57, issue 3, 1521-1551

Abstract: 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.

Date: 2002
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https://doi.org/10.1111/1540-6261.00468

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:57:y:2002:i:3:p:1521-1551

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