Motivation and Performance Following Open-Ending of Closed-End Funds

Posted: 29 Apr 2005

See all articles by Aigbe Akhigbe

Aigbe Akhigbe

University of Akron - Department of Finance

Jeff Madura

Florida Atlantic University - College of Business

Alan L. Tucker

Pace University - Lubin School of Business

Abstract

This study investigates the motives for open-ending closed-end funds, and performance of closed-end funds following open-ending announcements. We find that the propensity to open end is higher for funds that are larger, have high expense ratios, exhibit high volatility, and whose prices reflect large discounts from net asset value. The total wealth effects of open-ending announcements are stronger for smaller closed-end funds, and in periods when market conditions are relatively weak. There is no observable evidence that the governance-related factors found to predict future open ending are being successfully used to extract higher gains.

Keywords: Closed-end funds, open-end funds, open

JEL Classification: G00

Suggested Citation

Akhigbe, Aigbe and Madura, Jeff and Tucker, Alan L., Motivation and Performance Following Open-Ending of Closed-End Funds. Available at SSRN: https://ssrn.com/abstract=712221

Aigbe Akhigbe (Contact Author)

University of Akron - Department of Finance ( email )

Akron, OH 44325-4803
United States
330-972-6883 (Phone)

Jeff Madura

Florida Atlantic University - College of Business ( email )

University Tower
220 SE 2 Avenue
Fort Lauderdale, FL 33301
United States
(954)762-5632 (Phone)
(954)762-5245 (Fax)

Alan L. Tucker

Pace University - Lubin School of Business ( email )

1 Pace Plaza
New York, NY 10038-1502
United States

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