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Overconfidence among professional investors: Evidence from mutual fund managers

  • Pütz, Alexander
  • Ruenzi, Stefan
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    We examine overconfidence among equity mutual fund managers. While overconfidence has been extensively documented among retail investors, evidence from professional investors is scarce. Consistent with theories of overconfidence, we find that fund managers trade more after good past performance. The higher trading activity after good performance is driven by individual portfolio performance, while the market performance has no significant impact. We rule out some alternative explanations for our results like increased trading as a response to tournament incentives, as a response to inflows, or as a rational reaction due to managerial learning about abilities.

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    File URL: http://econstor.eu/bitstream/10419/70117/1/736375740.pdf
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    Paper provided by University of Cologne, Centre for Financial Research (CFR) in its series CFR Working Papers with number 08-08 [rev.].

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    Date of creation: 2010
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    Handle: RePEc:zbw:cfrwps:0808r
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    Phone: 0221 / 470 5607
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    Web page: http://cfr-cologne.de/english/version06/html/home.php
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