Closed-End Funds and Discount Control Mechanisms

Reference : Closed-End Funds and Discount Control Mechanisms


	Document type :	E-prints/Working papers : Already available on another site
	Discipline(s) :	Business & economic sciences : Finance
	Focus Areas :	Finance
	To cite this reference:	http://hdl.handle.net/10993/56035

Title :	Closed-End Funds and Discount Control Mechanisms
Language :	English
Author, co-author :	Kräussl, Roman [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Finance (DF) >]
	Pollet, Joshua []
	Stefanova, Denitsa [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Finance (DF) >]
Publication date :	2023
Peer reviewed :	No
Keywords :	[en] Closed-end funds ; discount ; performance ; skill ; signaling ; information asymmetry ; repurchases ; continuation vote
Abstract :	[en] The discount control mechanisms that closed-end funds often choose to adopt before IPO are supposedly implemented to narrow the difference between share price and net asset value. We find evidence that non-discretionary discount control mechanisms such as mandatory continuation votes serve as costly signals of information to reveal higher fund quality to investors. Rents of the skill signaled through the announcement of such policies accrue to managers rather than investors as differences in skill are revealed through growing assets under management rather than risk- adjusted performance.
Permalink :	http://hdl.handle.net/10993/56035
source URL :	http://dx.doi.org/10.2139/ssrn.4345001

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