Richard Fu is an Associate Professor of Finance in the Collat School of Business, University of Alabama at Birmingham in Birmingham, AL. Swasti Gupta-Mukherjee is an Assistant Professor of Finance in the Quinlan School of Business Administration, Loyola University Chicago in Chicago IL
Geography, Informal Information Flows and Mutual Fund Portfolios
Version of Record online: 10 MAR 2014
© 2014 Financial Management Association International
Volume 43, Issue 1, pages 181–214, Spring 2014
How to Cite
Fu, R. and Gupta-Mukherjee, S. (2014), Geography, Informal Information Flows and Mutual Fund Portfolios. Financial Management, 43: 181–214. doi: 10.1111/fima.12042
We thank Professor Raghavendra Rau (Editor) and an anonymous referee for their help in significantly improving the paper. All errors remain ours.
- Issue online: 10 MAR 2014
- Version of Record online: 10 MAR 2014
- Accepted manuscript online: 7 OCT 2013 02:25AM EST
This paper explores how informal information channels impact mutual fund performance. We measure the strengths of two location-based information channels: 1) information transfers among fund managers (fund-fund links) and 2) transfers between managers and the companies in which they invest (fund-company links). We find that each channel increases investment performance in the absence of the other, but decreases it when acting in combination. Stock selection associated with the presence of one channel, but the absence of the other, earns positive future returns. Our results indicate that the economic benefits of informal information channels depend critically on the nature of their interactions.