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The State of Origin of Australian Equity: Does Active Fund Manager Location Matter?
Kingsley Y. L. Fong University of New South Wales - School of Banking and Finance David R. Gallagher University of Technology, Sydney - Faculty of Business Adrian D. Lee University of Technology, Sydney - School of Finance and Economics Australian Journal of Management, Forthcoming UNSW Australian School of Business Research Abstract: We examine the relation of active equity fund managers' location proximity to a stock's headquarters and fund managers' stock selection skill and investment behaviour using a representative sample of Australian institutional equity funds. Contrary to the findings of much international research, our study reveals evidence which is inconsistent with a location advantage for Melbourne and Sydney active equity funds. Both Melbourne and Sydney fund managers overweight Melbourne stocks, exhibit skill in picking Sydney stocks and avoid poor performing Melbourne and Sydney stocks. In addition, we find no evidence of word-of-mouth trading effects in Melbourne or Sydney funds. Taken together, this suggests information asymmetries arising from location are weak for Melbourne and Sydney funds.
Keywords: Location, Information Advantages, Portfolio Management, Investment Performance JEL Classifications: G23 Accepted Paper SeriesDate posted: May 30, 2007 ; Last revised: September 01, 2008Suggested CitationContact Information
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