What is in a Name? Mutual Fund Flows When Managers Have Foreign-Sounding Names
University of Miami - School of Business Administration
University of Mannheim - Department of Finance
Oliver G. Spalt
Tilburg University - Department of Finance
October 3, 2013
We show that name-induced stereotypes affect the investment choices of U.S. mutual fund investors. Managers with foreign-sounding names have about 10% lower annual fund flows and this effect is stronger among funds that have more conservative clienteles or are located in conservative regions. "Foreign" managers also experience lower appreciation (greater decline) in flows following good (bad) performance. Following 9/11, flows to funds with managers with Middle-Eastern names decline abnormally. Even in an experimental setting where skill differences are absent, individuals allocate 14% less money to the "foreign" index fund. This gap widens by 42% following the Boston marathon bombings.
Number of Pages in PDF File: 88working papers series
Date posted: November 2, 2011 ; Last revised: October 4, 2013
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