The Ties that Bind: Work Connections and Mutual Fund Investment Ideas

53 Pages Posted: 28 Dec 2019

See all articles by Egemen Genc

Egemen Genc

University of Illinois at Chicago

Sara Shirley

Middle Tennessee State University

Jeffrey Stark

Middle Tennessee State University

Hai Tran

Loyola Marymount University - Department of Finance and Computer Information Systems

Date Written: December 3, 2019

Abstract

Mutual funds with managers who share a work connection have greater overlap in portfolio holdings, equity purchases, and equity sales. This result persists even after the work connection ends. Several tests to mitigate endogeneity concerns provide supportive evidence of a causal interpretation that work connections lead to the sharing of investment ideas among mutual fund managers. Finally, we find that equity purchases shared through work connections outperform non-connected purchases, particularly in fund families that provide strong incentives to compete, suggesting that managers likely share information with a quid-pro-quo expectation.

Keywords: mutual fund, investment ideas, information sharing, social connections, work connections, portfolio overlap

JEL Classification: G11

Suggested Citation

Genc, Egemen and Shirley, Sara and Stark, Jeffrey and Tran, Hai, The Ties that Bind: Work Connections and Mutual Fund Investment Ideas (December 3, 2019). Available at SSRN: https://ssrn.com/abstract=3497725 or http://dx.doi.org/10.2139/ssrn.3497725

Egemen Genc

University of Illinois at Chicago ( email )

1200 W Harrison St
Chicago, IL 60607
United States

Sara Shirley

Middle Tennessee State University ( email )

Murfreesboro, TN 37132
United States

Jeffrey Stark (Contact Author)

Middle Tennessee State University ( email )

Murfreesboro, TN
United States

Hai Tran

Loyola Marymount University - Department of Finance and Computer Information Systems ( email )

Los Angeles, CA 90045
United States
3103387409 (Phone)

HOME PAGE: http://www.haitranv.com

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
59
Abstract Views
427
rank
391,513
PlumX Metrics