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The Value of Social Networks in Financial Markets

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  • Michela Rancan

Abstract

Social contacts influence decisions and economic outputs in a variety of contexts. Does social network matter also in financial markets? In this paper I investigate the effect of social networks on mutual funds performance by exploiting data on the education of U.S. fund managers. The results show that performance is better for fund managers with many social connections. Furthermore, positional advantages in the social network generate superior performance. This evidence suggests that social interaction and information spillovers have a positive and meaningful value for mutual funds.

Suggested Citation

  • Michela Rancan, 2013. "The Value of Social Networks in Financial Markets," RSCAS Working Papers 2013/21, European University Institute.
  • Handle: RePEc:rsc:rsceui:2013/21
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    References listed on IDEAS

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    More about this item

    Keywords

    Social Network; Mutual Fund; Performance;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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