Local Religious Beliefs and Mutual Fund Risk-Taking Behaviors
University of Georgia - Department of Finance; Hong Kong University of Science & Technology - Department of Finance
National University of Singapore (NUS) - Department of Finance; Southern Methodist University (SMU) - Edwin L. Cox School of Business
P. Eric Yeung
Cornell University - Samuel Curtis Johnson Graduate School of Management
November 21, 2011
We study the effects of local religious beliefs on mutual fund risk-taking behaviors. Funds located in low-Protestant or high-Catholic areas exhibit significantly higher fund return volatilities. Similar differences persist when we use the religiosity ratios at fund managers’ college locations. Risk-taking associated with local religious beliefs manifests in higher portfolio concentrations, higher portfolio turnover, more aggressive interim trading, and more “tournament” risk-shifting behaviors, but not over-weighting risky individual stocks. Overall, our results suggest that local religious beliefs have significant influences on mutual fund behaviors.
Number of Pages in PDF File: 34
Keywords: Mutual funds, Geographic Location, Religion
JEL Classification: G23, G32, M54, Z12
Date posted: December 20, 2009 ; Last revised: November 22, 2011
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