Speed of Information Diffusion within Fund Families
Review of Asset Pricing Studies, Forthcoming
Posted: 19 Sep 2016
Date Written: August 1, 2016
We document that speed of information dissemination within mutual fund families positively affects fund performance. This suggests that the resultant benefits of higher information precision far outweigh free-riding costs associated with fast internal dissemination. The performance effect is stronger when information travels across managers from different, rather than the same, styles. This is consistent with fast information diffusion aggregating complementary insights that sharpen information precision, but also with fewer free-riding opportunities among managers from different styles. Managers rationally exploit the resultant higher information precision by trading more, relying less on public information, and investing differently than unaffiliated peers.
Keywords: Information Diffusion, Mutual Fund Performance, Fund Families, Investment Behavior, Organizational Structures
JEL Classification: D23, D830, G23, L22
Suggested Citation: Suggested Citation