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What drives home bias? Evidence from fund managers' views

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Author Info
Torben Lütje
Lukas Menkhoff (Department of Economics, University of Hannover, Germany)

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Abstract

A new survey of fund managers reveals home bias for these sophisticated investors in a setting being unrestricted by customer preferences or legal requirements. We confirm informational and behavioural determinants of home bias and find them to hold simultaneously. Further examinations of potential characteristics of home biased fund managers show that the perceived informational advantage does not need to be valid. Multivariate analyses indicate home bias being related to relative return optimism, overconfidence, higher age, lower bonus and less experience. Therefore, behavioural determinants contribute usefully towards an explanation of the home bias puzzle. Copyright © 2007 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/ijfe.309
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Article provided by John Wiley & Sons, Ltd. in its journal International Journal of Finance & Economics.

Volume (Year): 12 (2007)
Issue (Month): 1 ()
Pages: 21-35
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Handle: RePEc:ijf:ijfiec:v:12:y:2007:i:1:p:21-35

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lupia, Arthur & Krupnikov, Yanna & Levine, Adam Seth & Grafstrom, Cassandra & MacMillan, William & McGovern, Erin, 2008. "How “Point Blindness” Dilutes the Value of Stock Market Reports," MPRA Paper 9612, University Library of Munich, Germany. [Downloadable!]
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  2. Stotz, Olaf & L\"utje, Torben & Menkhoff, Lukas & von Nitzsch, R\"udiger, 2004. "Do Fund Managers Expect Mean Averting Returns?," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover dp-309, Universität Hannover, Wirtschaftswissenschaftliche Fakultät. [Downloadable!]
  3. Menkhoff, Lukas & Schmeling, Maik & Schmidt, Ulrich, 2008. "Are all professional investors sophisticated?," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover dp-397, Universität Hannover, Wirtschaftswissenschaftliche Fakultät. [Downloadable!]
  4. Menkhoff, Lukas & Nikiforow, Marina, 2008. "Professionals' endorsement of behavioral finance: Does it impact their perception of markets and themselves?," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover dp-392, Universität Hannover, Wirtschaftswissenschaftliche Fakultät. [Downloadable!]
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  5. Nikiforow, Marina, 2009. "Does training on behavioral finance influence fund managers' perception and behavior?," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover dp-419, Universität Hannover, Wirtschaftswissenschaftliche Fakultät. [Downloadable!]
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