When Should Firms Share Credit with Employees? Evidence from Anonymously Managed Mutual Funds

Between 1993 and 2004, the share of mutual funds disclosing manager names to their investors fell significantly. We argue that the choice between named and anonymous management reflects a tradeoff between the marketing benefits of naming managers and the costs associated with their increased future bargaining power. Consistent with this tradeoff, we find that funds with named managers receive more positive media mentions, have greater inflows, and suffer less return diversion due to within family cross-subsidization, but that departures of named managers reduce inflows, especially for funds with better past performance. To the extent that the hedge fund boom differentially increased outside opportunities for successful named managers, we predict that it should have increased the costs associated with naming managers and led to more anonymous management. Indeed, we find that the shift towards anonymous management is greater in those asset classes and geographical areas with more hedge fund activity