Mutual funds' reporting frequency and firms' responses to undervaluation: The role of share repurchases

Thomas Bourveau, Xinlei Li, Daniele Macciocchi, Chengzhu Sun

Research output: Journal article publicationJournal articleAcademic researchpeer-review

1 Citation (Scopus)

Abstract

We examine a regulatory change that increased the reporting frequency of mutual funds' portfolios. Using a difference-in-differences design, we find that firms with greater ownership by mutual funds increase share repurchases following the regulatory change. We show that these share repurchases are a firm's rational response to undervaluation, which occurs because fund managers become shortsighted following the regulation and sell companies with good long-term prospects. Collectively, our results shed light on an unintended consequence of more frequent reporting in a delegated asset management framework.

Original languageEnglish
Pages (from-to)2616–2642
Number of pages27
JournalContemporary Accounting Research
Volume40
Issue number4
DOIs
Publication statusPublished - 1 Oct 2023

Keywords

  • mutual funds
  • myopia
  • reporting frequency
  • share repurchases

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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