Market Condition and Mutual Fund Flow-Performance

In this study we analyze mutual fund flow-performance relation by using a novel sample of Chinese mutual funds and focus on the impact of stock market conditions. we find that the flow-performance relation varies significantly with market conditions and the positive relation is more pronounced during bull markets. The asymmetric flow-performance relation under different market conditions is consistent with Thaler and Johnson's (1990) the house money effect and the overconfidence hypothesis proposed by Gervais and Odean (2001).