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The Impact of Mutual Fund Ownership on Corporate Investment: Evidence from a Natural Experiment

Authors and Corporations: Kisin, Roni (Author)
Title: The Impact of Mutual Fund Ownership on Corporate Investment: Evidence from a Natural Experiment
Language: English
published:
[S.l.] SSRN [2011]
Item Description: 1 Online-Ressource (41 p) ; Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 21, 2011 erstellt
DOI: 10.2139/ssrn.1828183
Description
Mutual fund holdings data reveal a significant impact of mutual funds on the capital expenditures ("CapEx'') of their portfolio companies. Following the shock to mutual fund ownership caused by the 2003 scandal, during which 25 fund families experienced significant outflows of capital, firms held by distressed funds decreased capital expenditures on average. CapEx changes mirrored the types of funds: it decreased more (increased) in firms held by funds whose past ownership was associated with increases (significant decreases) in CapEx. Consistent with governance by the threat of exit, firms that drive the effects have higher wealth-performance sensitivity, liquid stock, bigger changes in ownership and the types of funds, larger number of distressed funds, and funds with bigger outflow