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1 – 4 of 4David E. Allen and Jerry T. Parwada
This paper aims to examine mutual fund investors' response to mergers of Australian mutual fund companies.
Abstract
Purpose
This paper aims to examine mutual fund investors' response to mergers of Australian mutual fund companies.
Design/methodology/approach
Two matching‐control techniques are employed to analyse the impact of mergers on excess money in and out of open and closed funds involved in the transactions. The paper employs cross‐sectional regression analyses to examine the impact of mergers on different types of parties to mergers.
Findings
The results suggest that mergers are not accompanied by increased money flows. Instead investors withdraw from the target funds prior to and after the merger. Funds belonging to specialist mutual fund companies record more gains in assets under management than declines following mergers, and that money inflow gains at competing funds induce reductions of management expense ratios at target funds.
Research limitations/implications
This paper studies mergers in only one industry in a single country. Future studies may extend to other industries and economies.
Originality/value
This paper extends prior research on the flow effects of mergers at individual fund level by considering the issue at the corporate level.
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David Lacey, Sigi Goode, Jerry Pawada and Dennis Gibson
The purpose of this paper is to undertake an exploratory study on mapping the investment fraud methods and tactics used by scammers against the emerging literature on scam…
Abstract
Purpose
The purpose of this paper is to undertake an exploratory study on mapping the investment fraud methods and tactics used by scammers against the emerging literature on scam compliance.
Design/methodology/approach
Qualitative interviews were conducted with victims of investment fraud supported by the engagement of specialist counsellors and allied health professionals who specialise in scam victim support (including investment fraud).
Findings
Investment fraud offending in the cases sampled exhibited a number of dominant offending traits and methodological themes. These included a strong reliance or dependency on legitimate service provisioning on the part of the fraudster and the use of key trust measures to lure the victim. The empirical data revealed the presence of a number of scam compliance influences captured in the literature, including trust, social influence and urgency, as well as others not previously documented that pave the way for further research attention.
Research limitations/implications
The research only examined a sample of investment fraud victim experiences that engaged a national victim support service immediately following detection over a 24 month period.
Practical implications
The research found that offending relied upon the participation of trust-building signals and measures. Legitimate economy participants appear to play a dominant role in enabling investment scam activities, further creating efficiencies for criminals. The offending tended to follow a number of distinct but connected phases. Impacts were influenced by specific offending attributes, such as whether remote access was given to offenders of a victim’s device, as well as the nature of the identity credentials access.
Originality/value
The research has practically applied an emerging view of scam compliance influences and vulnerabilities within an investment fraud context. The study is novel in its thematic analysis of the distinct phases and tactics used by scammers.
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Nixon S. Chekenya and Shingirai Sikomwe
Using data for the period 1965–2016, we investigate whether there are systematic differences between the investment performance of Black fund managers and those of other races in…
Abstract
Purpose
Using data for the period 1965–2016, we investigate whether there are systematic differences between the investment performance of Black fund managers and those of other races in South Africa and whether investors recognize these differences. The two-tailed test results show that there is no significant difference between the two means considering the 12 months yield return at a hypothesized mean difference of zero. There is no statistical difference at 5% level of significance implying that the performance of Black fund managers is as equally as that of managers of other races. Our results also show that the percentage of Black fund managers in South Africa is still too low even as the workforce gets diverse. There's no single explanation for what is happening in this industry. The findings cannot be explained by differences in fund characteristics such as age, total assets under management or expenses or from the performance lenses. The results seem hard to reconcile with an explanation of differences in portfolio characteristics such as return volatility or market, size, value and momentum exposures.
Design/methodology/approach
We test the glass cliff hypothesis by employing conditional logistic regression (CLR). The approach enables the use of case/control style of analysis where White/majority fund managers are the control population and professional minorities are the case group. The selection of these as fund managers is our event or outcome variable. To test savior effect hypothesis, we employ analysis of variance (ANOVA). The technique enables us to compare variances between the groups: when a White male fund manager replaces a professional minority, when a White male fund manager replaces a White male fund manager and when a professional minority replaces a professional minority.
Findings
Our analyses so far have documented a woeful underrepresentation of Black fund managers in South Africa's mutual funds industry. We explore potential explanations for these trends. Our analysis is meant to be suggestive. Are Blacks, women, people of color and ethnic minorities finding success in the investment industry? Are they having rewarding and fulfilling careers? Or is the industry still homogenous (just a White man's world) with a thin veneer of diversity layered on for public relations effect? The percentage of Black fund managers in South Africa is still too low even as the workforce gets diverse. There is no single explanation for what is happening in this industry. The findings cannot be explained by differences in fund characteristics such as age, total assets under management or expenses or from the performance lenses. Also, the results seem hard to reconcile with an explanation of differences in portfolio characteristics such as return volatility or market, size, value and momentum exposures.
Research limitations/implications
The two-tailed test results show that there is no significant difference between the two means considering the 12 months yield return at a hypothesized mean difference of zero. There is no statistical difference at 5% level of significance. Our results so far establish that, ceteris paribus, the performance of Black fund managers is as equally as that of managers of other races.
Practical implications
The two-tailed test results show that there is no significant difference between the two means considering the 12 months yield return at a hypothesized mean difference of zero. There is no statistical difference at 5% level of significance. Our results so far establish that, ceteris paribus, the performance of Black fund managers is as equally important as that of managers of other races.
Social implications
The two-tailed test results show that there is no significant difference between the two means considering the 12 months yield return at a hypothesized mean difference of zero. There is no statistical difference at 5% level of significance. Our results so far establish that, ceteris paribus, the performance of Black fund managers is as equally important as that of managers of other races.
Originality/value
This paper investigates whether there are systematic differences between the investment performance of Black fund managers and those of other races in South Africa and whether investors recognize these differences. Our hypothesis is that due to Broad-Based Black Economic Empowerment (BBBEE) laws in the country and possibly, due to a perception of discrimination in the market, it is only Black fund managers with superior fund management skills that enter the profession. As such, we expect to find superior performance among Black fund managers. We also conjecture that investors recognize this phenomenon and reward Black fund managers with more fund flows and more investment mandates than others.
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Nixon S. Chekenya and Heinz Eckart Klingelhöfer
The paper examines the possible existence of systematic performance differences between Broad based Black Economic Empowerment (B-BBEE) affiliated and non-B-BBEE affiliated mutual…
Abstract
Purpose
The paper examines the possible existence of systematic performance differences between Broad based Black Economic Empowerment (B-BBEE) affiliated and non-B-BBEE affiliated mutual fund firms in South Africa and see whether the indigenisation laws affect firm performance directly through their effects on firm behaviour.
Design/methodology/approach
The authors’ baseline regression is a model features that varies between the observed groups in Fama-MacBeth regressions. To address the issue of how B-BBEE laws affect mutual funds' performance, the study follows Golec (1988, p. 77) in calculating mutual fund returns and follows Carhart's (1997) four-factor regression model.
Findings
The paper's results also cannot confirm with statistical significance the expectation motivated by theory that B-BBEE laws influence firm performance negatively, thus, predicting a block for foreign investment. The authors’ much longer sample period (from 2004 to 2016) does not lead to significant other results than a prior study published only shortly after the B-BBEE laws coming into force. However, this study’s results could not confirm that these laws have effects on firm performance.
Research limitations/implications
The authors chose all the 3,320 B-BBEE-affiliated mutual fund firms and 3,329 non-B-BBEE-affiliated ones in the Morningstar database that had complete data for the period 2004– 2016.
Practical implications
The study's results cannot confirm with statistical significance the expectation motivated by theory that B-BBEE laws influence firm performance negatively, thus, predicting a block for foreign investment.
Originality/value
B-BBEE laws have been topical in the South African mutual fund industry. The unit trust industry in South Africa started with the establishment of the Sage Fund in 1965 in order to cater for the normal investors' needs for an easy product that starts with low investment amounts, but offers professional assets management and wide risk diversification across an extensive shares portfolio, that can be liquidated at short notice.
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