Closed-End Fund Discounts and Expected Investment Performance
This article provides empirical support for the theory that closed-end fund discounts reflect expected investment performance. Evidence is presented to explain how equity closed-end fund initial public offerings (IPOs) can sell at a premium when existing funds sell at a discount and why the initial IPO premiums decay after the IPO. Relative premium decay data are presented. Tests on (1) the relation between relative premium changes and investment performance following IPOs, (2) relative premium mean-reversion following management changes, and (3) net redemptions following closed-end fund open-endings for funds trading at pre-open-ending announcement discounts individually support and collectively strongly support the theory. Copyright 2004 by the Eastern Finance Association.
Year of publication: |
2004
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Authors: | Ferguson, Robert ; Leistikow, Dean |
Published in: |
The Financial Review. - Eastern Finance Association - EFA. - Vol. 39.2004, 2, p. 179-202
|
Publisher: |
Eastern Finance Association - EFA |
Saved in:
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