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Geography, Informal Information Flows and Mutual Fund Portfolios

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  • Richard Fu
  • Swasti Gupta-Mukherjee

Abstract

type="main"> 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.

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  • Richard Fu & Swasti Gupta-Mukherjee, 2014. "Geography, Informal Information Flows and Mutual Fund Portfolios," Financial Management, Financial Management Association International, vol. 43(1), pages 181-214, March.
    • Handle: RePEc:bla:finmgt:v:43:y:2014:i:1:p:181-214
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    6. Tsai, Li-Chuan & Zhang, Ruhui & Zhao, Cuifang, 2019. "Political connections, network centrality and firm innovation," Finance Research Letters, Elsevier, vol. 28(C), pages 180-184.
    7. Chuluun, Tuugi, 2017. "Global portfolio investment network and stock market comovement," Global Finance Journal, Elsevier, vol. 33(C), pages 51-68.

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