Cash flows between investors and funds are both cause and effect in a complex web of
economic decisions. Among the issues at stake are the prospects and fees of the funds, the …

Gruber (1996) drew attention to the puzzle that investors buy actively managed equity
mutual funds, even though on average such funds underperform index funds. We uncover …

I propose a parsimonious model that reproduces the negative risk-adjusted performance of
actively managed equity mutual funds. In the model, a fund manager can generate state …

Business connections can mitigate agency conflicts by facilitating efficient information
transfers, but can also be channels for inefficient favoritism. I analyze these two effects in the …

We study the impact of contractual incentives on the performance of mutual funds. We find
that high-incentive contracts induce managers to take more risk and reduce the funds' …

This paper documents the range of portfolio manager ownership in the funds they manage
and examines whether higher ownership is associated with improved future performance …

This article studies one of the potential causes of the financial market bubble of the late
1990s: the herding behavior of mutual funds. We show that the incentives contained in the …

In this paper, we develop a model of the market for equity mutual funds that captures three
key characteristics of this market. First, there is competition among funds. Second, fund …

We examine changes in equity mutual funds' investment advisory contracts. We find
substantial advisory compensation rate changes in both directions, with typical percentage …

Distinguishing between switches, pre-authorized contributions, systematic withdrawal plans,
reinvestments, and distributions, we find that different types of fund flow exhibit distinct …