Asset Management and Investment Banking
Copyright policy )Asset Management and Investment Banking
Abstract We find evidence that conflicts of interest are pervasive in the asset management business owned by investment banks. Using data from 1990 to 2008, we compare the alphas of mutual funds, hedge funds, and institutional funds operated by investment banks and non-bank conglomerates. We find that, while no difference exists in performance by fund type, being owned by an investment bank reduces alphas by 46 basis points per year in our baseline model. Making lead loans increases alphas, but the dispersion of fees across portfolios decreases alphas. The economic loss is $4.9 billion per year.
- DePaul University United States
- The University of Texas System United States
- Cornell University United States
- William & Mary United States
- Indiana University United States
investment banks, mutual funds, Cornell, 330, investment bank, hedge funds, institutional funds, performance valuation, performance evaluation
investment banks, mutual funds, Cornell, 330, investment bank, hedge funds, institutional funds, performance valuation, performance evaluation
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