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The Small World of Investing: Board Connections and Mutual Fund Returns / Lauren Cohen, Andrea Frazzini, Christopher Malloy.
- Format:
- Book
- Author/Creator:
- Cohen, Lauren.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w13121.
- NBER working paper series no. w13121
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- The Small World of Investing
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2007.
- Summary:
- This paper uses social networks to identify information transfer in security markets. We focus on connections between mutual fund managers and corporate board members via shared education networks. We find that portfolio managers place larger bets on firms they are connected to through their network, and perform significantly better on these holdings relative to their non-connected holdings. A replicating portfolio of connected stocks outperforms a replicating portfolio of non-connected stocks by up to 8.4% per year. Returns are concentrated around corporate news announcements, consistent with mutual fund managers gaining an informational advantage through the education networks. Our results suggest that social networks may be an important mechanism for information flow into asset prices.
- Notes:
- Print version record
- May 2007.
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