Threat-rigidity vs. social loafing in team-managed funds

Cristhian Rodriguez-Revilla (), Carlos Castro-Iragorri () and Aurora García-Gallego ()
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Cristhian Rodriguez-Revilla: Department of Economics, Universidad CEU San Pablo, Madrid, Spain
Carlos Castro-Iragorri: Department of Economics, Universidad del Rosario, Bogotá, Colombia
Aurora García-Gallego: LEE and Department of Economics, Universitat Jaume I, Castellón, Spain

No 2026/12, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: We document a structural paradox in mutual fund management: the efficacy of team decision-making is contingent on the psychological pressure exerted by capital flows. Using holdings-based data for U.S. equity funds (2000–2020), we isolate behavioral responses from managerial skill by exploiting a dual-robustness framework of systemic macro-liquidity shocks and CAPM-orthogonalized idiosyncratic flows. We find that teams function as a “defensive shield” during liquidity crises (outflows), generating approximately 11.5 basis points superior selling selectivity compared to solo managers. We attribute this to the Threat- Rigidity effect, where external threats trigger cohesive, disciplined monitoring. Conversely, during periods of capital abundance (inflows), teams become a liability, under-performing solo managers by roughly 36 basis points in purchasing selectivity. This asymmetry is consistent with social loafing and decision latency in low-threat environments. Although our archival design observes realized trading outcomes rather than internal committee deliberations, the economic magnitude of this asymmetry challenges the assumption of team superiority, suggesting that they are specialized organizational insurance policies optimized for downside risk mitigation.

Keywords: Mutual funds; team management; group dynamics; threat-rigidity; liquidity shocks; behavioral finance. (search for similar items in EconPapers)
JEL-codes: D91 G11 G23 G41 (search for similar items in EconPapers)
Pages: 93 pages
Date: 2026
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