The Investment Value of Fund Managers’ Experience Outside the Financial Sector

55 Pages Posted: 21 Sep 2014 Last revised: 11 Jun 2017

See all articles by Gjergji Cici

Gjergji Cici

University of Kansas - School of Business

Monika Gehde-Trapp

University of Mannheim - Finance Area

Marc-André Goericke

University of Cologne

Alexander Kempf

University of Cologne - Department of Finance & Centre for Financial Research (CFR)

Multiple version iconThere are 2 versions of this paper

Date Written: June 10, 2017

Abstract

Human capital acquired while working in other industries before joining fund management provides fund managers with an information advantage. Fund managers exploit this advantage by overweighting their experience industries, picking outperforming stocks from these industries, and timing investments in their experience industries better than in other industries. These managers’ superior information gets impounded into stock prices slowly, allowing for profitable mimicking strategies. Families exploit their manager’s industry-specific human capital by employing their investment ideas broadly in other funds. The investment value of industry experience is unaffected by whether the manager with such experience is in a team or not.

Keywords: Investor Learning, Investor Experience, Mutual funds

JEL Classification: G23, D83, J24

Suggested Citation

Cici, Gjergji and Gehde-Trapp, Monika and Goericke, Marc-André and Kempf, Alexander, The Investment Value of Fund Managers’ Experience Outside the Financial Sector (June 10, 2017). Available at SSRN: https://ssrn.com/abstract=2498797 or http://dx.doi.org/10.2139/ssrn.2498797

Gjergji Cici (Contact Author)

University of Kansas - School of Business ( email )

Capitol Federal Hall
1654 Naismith Drive
Lawrence, KS 66045
United States
785-864-3873 (Phone)

HOME PAGE: http://business.ku.edu/gjergji-cici

Monika Gehde-Trapp

University of Mannheim - Finance Area ( email )

L9, 1-2
Mannheim, 68131
Germany
++496211811561 (Phone)

Marc-André Goericke

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Alexander Kempf

University of Cologne - Department of Finance & Centre for Financial Research (CFR) ( email )

Cologne, 50923
Germany
+49 221 470 2714 (Phone)
+49 221 470 3992 (Fax)

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