Local Religious Beliefs and Mutual Fund Risk-Taking Behaviors

34 Pages Posted: 20 Dec 2009 Last revised: 22 Nov 2011

Tao Shu

University of Georgia - Department of Finance

Johan Sulaeman

National University of Singapore (NUS) - Department of Finance

P. Eric Yeung

Cornell University - Samuel Curtis Johnson Graduate School of Management

Date Written: November 21, 2011

Abstract

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.

Keywords: Mutual funds, Geographic Location, Religion

JEL Classification: G23, G32, M54, Z12

Suggested Citation

Shu, Tao and Sulaeman, Johan and Yeung, P. Eric, Local Religious Beliefs and Mutual Fund Risk-Taking Behaviors (November 21, 2011). Available at SSRN: https://ssrn.com/abstract=1523770 or http://dx.doi.org/10.2139/ssrn.1523770

Tao Shu (Contact Author)

University of Georgia - Department of Finance ( email )

Department of Finance
Terry College of Business, University of Georgia
Athens, GA 30602
United States

Johan Sulaeman

National University of Singapore (NUS) - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://sites.google.com/site/johansulaeman/

P. Eric Yeung

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

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