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Size doesn't matter: diseconomies of scale in the mutual fund industry revisited

Accepted version
Peer-reviewed

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Type

Article

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Authors

Phillips, Blake 
Pukthuanthong, Kuntara 

Abstract

The academic literature has found mixed evidence that fund size is negatively related to performance. One reason for the lack of consensus may be that the fund size and performance relation is endogenous. In this paper, we identify a set of instrumental variables that influence fund size but are unrelated to expected fund performance. Using this specification, we show that fund size does not appear to affect fund performance.

Description

Keywords

Mutual fund performance, Size-performance relation, Instrumental variables, Diseconomies of scale

Journal Title

Journal of Banking and Finance

Conference Name

Journal ISSN

0378-4266
1872-6372

Volume Title

88

Publisher

Elsevier