Faculty of Business Seminar Series / Robert R. Chatt

Title : Don’t Bite the Hand that Feeds: Mutual Fund 401(k) Management and Firm M&A Activity

Abstract:

Serving as trustee of a sponsor firm’s 401(k) assets may alter the incentives of mutual fund companies to monitor firm behavior. In this paper, I use the M&A decisions of firms to reveal the governance effort of mutual fund families that serve as trustee. Over a sample of acquisitions announced between 1999 and 2013, I show that firms with mutual fund family trustees undertake lower quality mergers at higher frequencies. These firms are more likely to select private or diversifying targets, and to pay with cash. This evidence suggests mutual fund families decrease their monitoring of retirement asset client firms.

Seminar Place : AB2 Meeting Room 345