Essays on Institutional Trading in Equity Markets

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2021-04-29

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Abstract

This dissertation focuses on institutional trading in equity markets. In the first chapter, entitled “Do Mutual Funds Manipulate Star Ratings? Evidence from Portfolio Pumping,” I study how Morningstar ratings distort the incentives of mutual fund managers. I find that mutual fund managers manipulate Morningstar star ratings by inflating their month-end portfolio values when they are likely to finish the month in the vicinity of rating thresholds. In the second chapter co-authored with Munhee Han and Vikram Nanda, entitled “Institutional Brokerage Networks: Facilitating Liquidity Provision,” we examine how trading networks of mutual funds and their brokers affect trading costs in equity markets. We find that central funds outperform peripheral funds, as measured by execution shortfall and return gap.

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Institutional economics, Institutional investments, Mutual funds

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