Is There a Home Field Advantage in Global Markets?

62 Pages Posted: 13 Nov 2017 Last revised: 27 Sep 2018

See all articles by Murali Jagannathan

Murali Jagannathan

SUNY at Binghamton - School of Management

Wei Jiao

SUNY at Binghamton - School of Management

George Andrew Karolyi

Cornell University - Samuel Curtis Johnson Graduate School of Management

Date Written: August 21, 2017

Abstract

International equity mutual funds that hire managers from a country linked to the fund’s geographic mandate exhibit a strong bias to invest in stocks of that country. These funds with “home-biased managers” attract disproportionally more flows and reveal greater flow-performance sensitivity. Stocks domiciled in countries in which the fund has a home-field advantage outperform those held by other funds with investments in those same countries, but without home-biased managers. We interpret this new finding as evidence of an information-based channel through which the home-bias phenomenon may be revealed and we link it to theories that emphasize the role of an informational endowment advantage.

Keywords: international mutual funds, home-bias, information endowment, performance

JEL Classification: F32, F36, G11, G15, G23

Suggested Citation

Jagannathan, Murali and Jiao, Wei and Karolyi, George Andrew, Is There a Home Field Advantage in Global Markets? (August 21, 2017). Available at SSRN: https://ssrn.com/abstract=3068322 or http://dx.doi.org/10.2139/ssrn.3068322

Murali Jagannathan

SUNY at Binghamton - School of Management ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States
607-777-4639 (Phone)

Wei Jiao

SUNY at Binghamton - School of Management ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States

George Andrew Karolyi (Contact Author)

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

Ithaca, NY 14853
United States

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