Top Management Turnover: An Examination of Portfolio Holdings and Fund Performance

David Gallagher, Prashanthi Nadarajah and Matt Pinnuck
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Prashanthi Nadarajah: School of Banking and Finance, The University of New South Wales, Sydney, NSW 2052.
Matt Pinnuck: Department of Accounting, The University of Melbourne, Melbourne, VIC 3010.

Australian Journal of Management, 2006, vol. 31, issue 2, 265-292

Abstract: We examine the performance and portfolio characteristics of actively managed equity funds impacted by top management turnover. Utilizing a unique database of monthly portfolio holdings, our study finds that, post-replacement, previously poor performing funds experience improved returns. However, this improved performance is not attributable to superior stock selection skill. We also find these new managers decrease the fund's reliance on momentum strategies and decrease the portfolio's concentration, which then leads to a reduced tracking-error volatility. Prior to the replacement event, underperforming investment managers exhibit preferences for larger, growth-oriented stocks, as well as riding momentum strategies and increasing portfolio turnover.

Keywords: TOP MANAGEMENT TURNOVER; PORTFOLIO MANAGEMENT; INVESTMENT PERFORMANCE (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:31:y:2006:i:2:p:265-292

DOI: 10.1177/031289620603100205

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