TOP MANAGEMENT TURNOVER - AN EMPIRICAL-INVESTIGATION OF MUTUAL FUND MANAGERS

This paper examines the relation between the replacement of mutual fun d managers and their prior performance. Using the growth rate in a fun d's asset base and its portfolio returns as two separate measures of p erformance, I document an inverse relation between the probability of managerial replacement and fund performance. The sample of departing f und managers exhibits higher portfolio turnover rates and higher expen ses relative to an objective-matched sample of nonreplaced fund manage rs. The overall evidence is consistent with the presence of well-funct ioning internal and external market mechanisms for mutual fund manager s.