This paper examines asset fire sales and institutional price pressure in equity markets, using mutual fund transactions data from 1980 to 2003. The authors find that mutual funds experiencing large outflows tend to reduce their existing positions, creating price pressure in the securities they hold. This forced trading is costly for mutual funds, as investors who provide liquidity during these times earn significant abnormal returns. The paper also shows that future flow-driven transactions are predictable, creating an incentive for front-running. Extreme inflows can also be costly for mutual funds, as they tend to increase their existing positions, leading to significant price pressure. The study documents that concentrated mutual fund buying and selling caused by capital flows is highly related to the momentum effect in equity returns, but there is still a considerable abnormal return after controlling for momentum. The paper concludes by discussing the persistence of institutional price pressure and its implications for fund performance evaluation and market dynamics.This paper examines asset fire sales and institutional price pressure in equity markets, using mutual fund transactions data from 1980 to 2003. The authors find that mutual funds experiencing large outflows tend to reduce their existing positions, creating price pressure in the securities they hold. This forced trading is costly for mutual funds, as investors who provide liquidity during these times earn significant abnormal returns. The paper also shows that future flow-driven transactions are predictable, creating an incentive for front-running. Extreme inflows can also be costly for mutual funds, as they tend to increase their existing positions, leading to significant price pressure. The study documents that concentrated mutual fund buying and selling caused by capital flows is highly related to the momentum effect in equity returns, but there is still a considerable abnormal return after controlling for momentum. The paper concludes by discussing the persistence of institutional price pressure and its implications for fund performance evaluation and market dynamics.