What Drives Portfolio Pumping in the Korean Equity Fund Market?

초록

This paper analyzes whether portfolio pumping by fund managers is widespread in the Korean equity fund market, and identifies the factors encouraging this behavior. The study results demonstrate that (i) fund managers are tempted to distort fund performance through portfolio pumping at year-end (when their achievement is evaluated); (ii) this manipulation occurs more actively in small funds and those with good past performance; (iii) portfolio pumping is observed more in products of foreign or small-sized asset management companies; and (iv) although statistically less significant, fund managers are tempted to undertake price manipulation when their holdings have low liquidity.

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