Is “Voting with Your Feet” an Effective Mutual Fund Governance Mechanism?

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CFA Digest
May 2011 | Vol. 41 | No. 2 | 2 pages
Source: CFA Institute
Meijun Qian
Jot K. Yau, CFA (Reviewer)

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Abstract

The author uses the fund flows surrounding the abusive-timing and late-trading practices in mutual funds that were revealed in the 2003–04 trading scandals to test whether investors’ ability to withdraw or add funds deters bad behavior in mutual funds. The results support investor vigilance through “voting with your feet” actions.

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Topics
Behavioral Finance
    :
  • Individual Investor Behavioral Biases
|
Portfolio Management
    :
  • Mutual Funds, Pooled Funds, and Exchange-Traded Funds (ETFs)
|
Standards, Ethics, and Regulations (SER)
    :
  • Ethical Practices and Guidelines
Credits · About the CE Program
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