Price support in the stock market
Benjamin Golez () and
Jose Marin ()
Additional contact information
Benjamin Golez: Universitat Pompeu Fabra
No 2010-16, Working Papers from Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales
The interplay of delegated portfolio management and asset management ownership generates a double agency problem that may result on trading to support security prices. We test this hypothesis analyzing the trading patterns of mutual funds affiliated with banks with the stocks of their controlling banks. We show that affiliated mutual funds tend to increase the holdings of the parent bank stock following a large drop in the stock price of the bank. Further, we provide evidence that these patterns of trading are not consistent with portfolio rebalancing into the banking sector, contrarian trading or timing skills. We also provide evidence that the patterns of trading are not information-driven. This leads us to conclude that affiliated mutual funds follow this strategy to support the price of the parent bank.
Keywords: price support; conflict of interests; agency problem; mutual funds; asset management; fund families; banks; prosecution (search for similar items in EconPapers)
JEL-codes: G21 G23 G28 G30 G32 K22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-fmk and nep-mst
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to repec.imdea.org:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:imd:wpaper:wp2010-16
Access Statistics for this paper
More papers in Working Papers from Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales Contact information at EDIRC.
Bibliographic data for series maintained by IMDEA RePEc Maintainer ().