"Whom do you trust?" investor-advisor relationships and mutual fund flows

I measure the value that investors place on trust and relationships in asset management by examining mutual fund flows around announced changes in the ownership of fund management companies. I find a decline in flows of around 7% of fund assets in the year following the announcement date, starting after announcement and accelerating after the closing date of the ownership change. A decomposition into inflows and outflows shows that the overall decrease in flows is entirely driven by increasing outflows with no change in inflows. Retail investors and investors in funds with higher expense ratios are most responsive to ownership changes, providing new evidence that such investors place a significant value on trust and are more likely to respond to a relationship disruption by withdrawing their assets. Alternative explanations such as changes in distribution network, reactions to expected fund closure, expected or past manager changes, or poor expected returns do not seem to explain the results