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Do Past Performance and Past Cash Flows Explain Current Cash Flows into Retail Superannuation Funds in Australia?

Do Past Performance and Past Cash Flows Explain Current Cash Flows into Retail Superannuation... This paper examines the link between current-quarter cash flows and both past performance and past cash flows using a sample of Australian retail superannuation fund data (managed growth and managed stable) drawn from the period 1994 to 2000. This is a rapidly growing sector within the superannuation industry and it reflects investment behaviour of smaller investors rather than institutions and large corporations. Using both the Gruber (1996) approach and panel-data analysis we find a positive relationship between past performance and current-quarter cash flows as well as evidence of persistence in cash flows over time. Panel-data analysis also identifies a positive relationship between current net cash flows and past performance and cash inflows as well as a negative relationship between current net cash flows and past outflows. Market-wide growth in the retail superannuation sector over the study period does not appear to be driving these results. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Australian Journal of Management SAGE

Do Past Performance and Past Cash Flows Explain Current Cash Flows into Retail Superannuation Funds in Australia?

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Publisher
SAGE
Copyright
Copyright © by SAGE Publications
ISSN
0312-8962
eISSN
1327-2020
DOI
10.1177/031289620503000203
Publisher site
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Abstract

This paper examines the link between current-quarter cash flows and both past performance and past cash flows using a sample of Australian retail superannuation fund data (managed growth and managed stable) drawn from the period 1994 to 2000. This is a rapidly growing sector within the superannuation industry and it reflects investment behaviour of smaller investors rather than institutions and large corporations. Using both the Gruber (1996) approach and panel-data analysis we find a positive relationship between past performance and current-quarter cash flows as well as evidence of persistence in cash flows over time. Panel-data analysis also identifies a positive relationship between current net cash flows and past performance and cash inflows as well as a negative relationship between current net cash flows and past outflows. Market-wide growth in the retail superannuation sector over the study period does not appear to be driving these results.

Journal

Australian Journal of Management – SAGE

Published: Dec 1, 2005

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