Outsourcing Mutual Fund Management: Firm Boundaries, Incentives, and Performance

• 成果类型: Article
• 署名作者: Chen, Joseph; Hong, Harrison; Jiang, Wenxi; Kubik, Jeffrey D.
• 署名单位: University of California System; University of California Davis; Princeton University; Yale University; Syracuse University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12006
• 发表日期: 2013
• 页码: 523-558
• 关键词: Vertical Integration; asset ownership; RISK; equilibrium; governance; strategies; CONTRACTS; families; returns; stocks

摘要

We investigate the effects of managerial outsourcing on the performance and incentives of mutual funds. Fund families outsource the management of a large fraction of their funds to advisory firms. These funds underperform those run internally by about 52 basis points per year. After instrumenting for a fund's outsourcing status, the estimated underperformance is three times larger. We hypothesize that contractual externalities due to firm boundaries make it difficult to extract performance from an outsourced relationship. Consistent with this view, outsourced funds face higher powered incentives; they are more likely to be closed after poor performance and excessive risk-taking.