This study examines the relationship between fund flows and the disposition behaviour of fund managers. During our sample period of 1996-2014, we find that the disposition biases of fund managers are significantly and negatively correlated with unexpected fund flows but insignificantly correlated with expected fund flows. Additionally, funds embedded with a higher capital gains tax overhang tend to have managers with lower disposition biases. Further evidence shows that fund performance is influenced more by the flow-induced than the nonflow- induced disposition behaviour of fund managers.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics