Lai H. C., Wang K. M. 2016. Does Survivorship Bias of Mutual Funds Differ Between Liquidations and Mergers? Eastern European Business and Economics Journal 2(4): 299 - 314.
Liping GAO, The University of Texas at el Paso, USA;
Jan HAUKE, Adam Mickiewicz University, Poland;
Olena SOKOLOVSKA, Institute of Industrial Economics of National Academy of Sciences of Ukraine, Ukraine.
The performance of mutual funds may be misleading due to survivorship bias if the fund family tends to liquidate or merge funds. This paper suggests that funds subject to liquidations and mergers may differ in nature; therefore, this study distinguishes between the two activities. This paper examines whether survivorship bias differs according to whether a fund is liquidated or merged and explores the consequent implications. The empirical results show that Taiwanese equity funds have a survivorship bias of 1.056% annually. After eliminating the merged funds from the sample, we find that fund liquidation is related to performance. This indicates that the factors determining the liquidation and merger of mutual funds have significantly different impacts on the survivorship bias of these funds.
mutual fund; survivorship bias; liquidation; merger
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