This study examines how competition affects the profitability of mutual funds' trading on the post earnings announcement drift (PEAD). Our results show that while the average fund actively pursuing this strategy does not generate significant outperformance, funds that manage to avoid competition...

Using data on both fund stockholdings and fund returns, we show that actively-managed equity mutual funds are able to make significant excess returns net of actual transaction costs from trading on the accruals anomaly. We find that the top 10% of mutual funds that most actively follow the...