Benefits of Partial vs Full Mandatory Mutual Fund Disclosure

Ron Kaniel, Jennifer Li, Donghui Shi and Zhang Qi

No 18565, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study implications of partial versus full disclosure requirements on mutual fund trading and performance, by exploiting a unique hybrid disclosure policy in China, requiring full disclosure at a semi-annual frequency, but only disclosure of top-10 holdings at other quarters. Under partial disclosure, funds benefit from strategically concealing private information. Fund holdings outperform those under full disclosure by 3% over the following three months. Partial disclosure reduces window dressing distortions, doesn’t deteriorate market liquidity nor fund portfolios’ risk profiles. Together, the evidence suggests that not only a disclosure requirement, but its extent, is an important dimension of policy to consider.

JEL-codes: G11 G23 (search for similar items in EconPapers)
Date: 2023-10
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