Portfolio Manager Home-Country Culture and Mutual Fund Risk-Taking

Financial Management, Forthcoming

67 Pages Posted: 17 Jan 2019 Last revised: 24 Mar 2019

See all articles by Wei Jiao

Wei Jiao

SUNY at Binghamton - School of Management

Date Written: January 11, 2019

Abstract

I find that home-country culture affects portfolio managers’ investment risk-taking and performance. I focus on security value, which measures the degree to which people in a country assign importance to security, safety, and stability. Funds managed by managers from countries with higher security value exhibit lower fund return volatility, trade less frequently, and follow benchmarks more closely. These funds also tend to avoid lottery-type stocks and hence perform significantly better. However, the impact of home-country security value decays as managers spend more time away from their home countries.

Keywords: culture; portfolio managers; mutual funds; risk-taking; performance

JEL Classification: D81; G11; G23; G41

Suggested Citation

Jiao, Wei, Portfolio Manager Home-Country Culture and Mutual Fund Risk-Taking (January 11, 2019). Financial Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3314352 or http://dx.doi.org/10.2139/ssrn.3314352

Wei Jiao (Contact Author)

SUNY at Binghamton - School of Management ( email )

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

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