Face-to-Face or Face on Screen: Social Interactions and Mutual Fund Trading

Abstract

Using a comprehensive dataset of corporate site visits, we examine the role of in-person and virtual interactions on mutual fund investment decisions. Before COVID-19, fund pairs jointly attending in-person visits exhibit significant increases in trading similarity (12.7% above mean), substantially exceeding matched controls. This effect extends to stocks unrelated to the hosting firm and strengthens with manager familiarity, similar seniority, or gender diversity. Exploiting the exogenous shift to virtual communication induced by the COVID pandemic, we find in-person visits during the pandemic continue to trigger correlated trading of unrelated stocks, while virtual visits largely do not. Our findings suggest that in-person social interactions play a critical role in information acquisition in financial markets, a function that virtual interactions cannot easily replace.

Keywords: Trading similarity, Herding, G4 Social Interactions, Trading similarity, COVID-19, Remote Work, Site Visits

JEL Classification: D83, G11, G14, G23, G4