City Size and Fund Performance

AFA 2007 Chicago Meetings Paper

Journal of Financial Economics, 2009, 92, 252-275

55 Pages Posted: 14 Mar 2006 Last revised: 3 Sep 2015

Susan Kerr Christoffersen

University of Toronto - Rotman School of Management; Copenhagen Business School

Sergei Sarkissian

McGill University; Yerevan State University

Date Written: December 1, 2005

Abstract

The literature predicts that the average skill level and productivity are higher in larger cities. Prior studies use workers’ wage or education differentials to indirectly link city size and output. This article relates city size and productivity directly, using performance data of U.S. equity mutual funds. On average, funds in financial centers perform better than other funds in terms of both gross and risk-adjusted returns, but this difference is driven only by more experienced managers. Among funds in financial centers there is strong evidence of a positive relation between performance and manager experience in a given city, especially among New York funds. More importantly, we observe performance improvements of the same manager at the same fund in financial centers but not elsewhere. Our tests provide novel evidence of knowledge spillovers and learning in cities.

Keywords: Information spillovers, Labor market, Mutual funds, Performance evaluation

JEL Classification: G23, J24

Suggested Citation

Christoffersen, Susan Kerr and Sarkissian, Sergei, City Size and Fund Performance (December 1, 2005). AFA 2007 Chicago Meetings Paper. Available at SSRN: https://ssrn.com/abstract=890680 or http://dx.doi.org/10.2139/ssrn.890680

Susan E. Christoffersen

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416 946 5647 (Phone)
416 971 3048 (Fax)

HOME PAGE: http://www.rotman.utoronto.ca/schristoffersen

Copenhagen Business School

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Sergei Sarkissian (Contact Author)

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada
514-398-4876 (Phone)
514-398-3876 (Fax)

Yerevan State University

1 Alex Manoogian Street
Yerevan, 0025
Armenia

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