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Thy Neighbor's Portfolio: Word-of-Mouth Effects in the Holdings and Trades of Money Managers

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  • HARRISON HONG
  • JEFFREY D. KUBIK
  • JEREMY C. STEIN

Abstract

A mutual fund manager is more likely to buy (or sell) a particular stock in any quarter if other managers in the same city are buying (or selling) that same stock. This pattern shows up even when the fund manager and the stock in question are located far apart, so it is distinct from anything having to do with local preference. The evidence can be interpreted in terms of an epidemic model in which investors spread information about stocks to one another by word of mouth. Copyright 2005 by The American Finance Association.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1540-6261.2005.00817.x
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Bibliographic Info

Article provided by American Finance Association in its journal The Journal of Finance.

Volume (Year): 60 (2005)
Issue (Month): 6 (December)
Pages: 2801-2824

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Handle: RePEc:bla:jfinan:v:60:y:2005:i:6:p:2801-2824

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  1. Judith Chevalier & Glenn Ellison, 1998. "Career Concerns of Mutual Fund Managers," NBER Working Papers 6394, National Bureau of Economic Research, Inc.
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