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Political Cognitive Biases Effects on Fund Managers' Performance

Journal of Behavioral Finance (Forthcoming)

36 Pages Posted: 19 Jul 2016 Last revised: 6 Apr 2020

See all articles by Marian W. Moszoro

Marian W. Moszoro

Warsaw School of Economics (SGH); International Monetary Fund (IMF); George Mason University - Department of Economics; George Mason University - Interdisciplinary Center for Economic Science (ICES)

Multiple version iconThere are 3 versions of this paper

Date Written: March 20, 2020

Abstract

Does political affiliation matter for stock-market investing? Rare events can produce polarized narratives that potentiate cognitive dissonance on a spectrum of agents. Using a comprehensive dataset of equity hedge funds' performance and managers' political affiliation matched by their partisan contributions, I document higher returns of funds managed by Democrats for ten subsequent months---from December 2008 to September 2009---when the interpretation of the US central bank policy was politically polarized and conducive to cognitive dissonance. This result is robust to a set of falsification tests and randomized quasi-experiments.

Keywords: Political Biases, Money Managers' Performance

JEL Classification: D72, G11, G14

Suggested Citation

Moszoro, Marian W., Political Cognitive Biases Effects on Fund Managers' Performance (March 20, 2020). Journal of Behavioral Finance (Forthcoming), Available at SSRN: https://ssrn.com/abstract=2811350 or http://dx.doi.org/10.2139/ssrn.2811350

Marian W. Moszoro (Contact Author)

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://economics.gmu.edu/people/mmoszoro

George Mason University - Interdisciplinary Center for Economic Science (ICES) ( email )

400P Truland Building
George Mason University
Fairfax, VA 22030
United States

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