The Homeboy Bias: Evidence For and Determinants Of

54 Pages Posted: 15 Mar 2007

See all articles by Grant Richard McQueen

Grant Richard McQueen

Brigham Young University - Department of Business Management

Anders Karlsson

Stockholm University - Department of Corporate Finance

Date Written: March 14, 2007

Abstract

We document a new investor bias we call the homeboy bias. Whereas the home bias is a preference for domestic or local assets, the homeboy bias is a preference for domestic fund managers. Using the choices of mutual funds for retirement accounts of the Swedish population, and after controlling for past returns, fees, and fund styles, we find that funds offered by Swedish institutions received over 21 times more money than similar funds offered by foreign institutions. In cross-fund regressions, we show that the homeboy bias is distinct from the home bias and is not driven by economic explanations based on information asymmetries or foreign exchange risk. In cross-individual regressions, we show that the homeboy bias is strongest among financially-unsophisticated investors and that explanations for the homeboy bias may be based on behavioral preferences related to familiarity and nationalism. Thus, the homeboy bias is empirically distinct from the home bias but may have the same behavioral roots.

Keywords: Mutual funds, home bias, homeboy bias, familiarity

JEL Classification: G11, G23, H55

Suggested Citation

McQueen, Grant R. and Karlsson, Anders, The Homeboy Bias: Evidence For and Determinants Of (March 14, 2007). Available at SSRN: https://ssrn.com/abstract=971177 or http://dx.doi.org/10.2139/ssrn.971177

Grant R. McQueen (Contact Author)

Brigham Young University - Department of Business Management ( email )

TNRB 636
Provo, UT 84602
United States
801-422-3017 (Phone)

Anders Karlsson

Stockholm University - Department of Corporate Finance ( email )

School of Business
SE-106 91 Stockholm
Sweden
+46 8 162180 (Phone)
+46 8 153054 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
97
Abstract Views
1,000
rank
303,164
PlumX Metrics