I can see clearly now: The impact of disclosure requirements on 401(k) fees

Badoer, Dominique C.; Costello, Charles P.; James, Christopher M.

doi:10.1016/j.jfineco.2019.10.001

Cited by 20 publications

(9 citation statements)

References 13 publications

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“…First, retail investors appear to become more sensitive to fund fees in the post-UCITS IV period. To some extent, this is also consistent with Badoer et al (2020) who report lower retail investor fees following a change in the US regulation that increased transparency in pension plan fees. Second, retail investors' appetite for the fund's risk-taking reduces after the introduction of UCITS KIID.…”

Section: Discussionsupporting

confidence: 85%

“…Our methodological approach is related to numerous studies that investigate associations between financial regulation and firm-level characteristics (e.g. Banerjee et al, 2015;Badoer et al, 2020). Namely, we analyse whether investors' sensitivity to the essential elements of UCITS IV is statistically different between the pre-and post-UCITS IV periods.…”

Section: Research Design 31 Empirical Modelmentioning

confidence: 99%

“…H€ usser and Wirth, 2013;H€ usser and Wirth, 2014;Oehler et al, 2014;H€ usser, 2015; see also Muchhalfen and Gaschler, 2021 in the PRIIPs KID context). Second, this paper adds to the empirical literature on the real-world impacts of financial regulation on the mutual funds market (Golec, 2003;Golec and Starks, 2004;Badoer et al, 2020). Finally, we enrich the literature, which is dominated by US-based studies, by using empirical data from a European market which differs from the US market in terms of size and breadth (e.g.…”

Section: Introductionmentioning

confidence: 99%

“…Further, investors rely on the past performance indicator in a short-form disclosure document despite the presence of a disclaimer stating its irrelevance as to predicting future returns (Hüsser and Wirth, 2014; Johnson et al ., 2021). However, an investigation into a change in disclosure requirements with the goal of increasing the transparency of pension plan fees using real US market data by Badoer et al. (2020) suggests that regulation can benefit retail investors whose fees reduced as a result.…”

Section: Introductionmentioning

confidence: 99%

“…, 2014; Hüsser, 2015; see also Muchhalfen and Gaschler, 2021 in the PRIIPs KID context). Second, this paper adds to the empirical literature on the real-world impacts of financial regulation on the mutual funds market (Golec, 2003; Golec and Starks, 2004; Badoer et al. , 2020).…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Key investor information disclosure regulation and retail mutual fund flows in the Finnish market

Turtiainen

Saastamoinen

Suhonen

et al. 2022

IJBM

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PurposeIn the European Union, the Undertakings for Collective Investment in Transferable Securities Directive (UCITS IV) requires fund management companies to provide a Key Investor Information Document (UCITS KIID) for investors. This papers uses archival data from the Finnish mutual fund market to test how the regulation's information disclosure requirements concerning past performance, risk and fund fees are associated with mutual fund flows.Design/methodology/approachThe study uses archival data on the mutual funds market in Finland to test how the regulation relating to retail investors' information requirements is associated with mutual fund flows.FindingsOur findings suggest that the UCITS KIID predicts retail investors' fund flows. While past performance is associated with fund flows throughout the observation period, retail investors appear to have become more sensitive to fund fees and invest in less risky funds following the adoption of the UCITS IV period.Practical implicationsInformation relating to fund fees and risk appears to be relevant to retail investors, which should be acknowledged in future iterations of short-form disclosure and in mutual fund marketing.Originality/valueThis paper is the first to assess the significance of KIID in actual market environment.

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Section: Discussionsupporting

confidence: 85%

Section: Research Design 31 Empirical Modelmentioning

confidence: 99%