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Professor Brown’s Research Featured in The Wall Street Journal

By Wisconsin School of Business

December 9, 2014

David Brown
David Brown, professor of finance at the Wisconsin School of Business.

The Wall Street Journal recently cited research from David Brown, finance professor at the Wisconsin School of Business, in a discussion on how “window dressing” affects the volatility of mutual fund prices.

The article, titled “Mutual Funds Decorate the Portfolio,” examines the practice of window dressing mutual funds, or making cosmetic changes to a portfolio before the end of each calendar quarter.

This practice, while seeming innocuous, could be a contributing factor to the increased stock volatility that market observers note at the end of every reporting period.

The research explains the boom and bust cycle at the end of each calendar quarter: “The stocks that rank high on intermediate-term momentum and that are purchased at the end of a quarter experience large positive returns at that time, followed by large negative returns in the next month.”

To read the full article, visit the The Wall Street Journal’s website.

To read Brown’s paper, which is co-authored by Youchang Wu, assistant professor of finance, visit the Social Science Research Network website.