Journal of Financial Economics Vol. 143 No. 2 2022
Is there a home field advantage in global markets?
Abstract
International equity mutual funds increasingly hire managers from countries linked to their geographic mandate. We show these funds with “home-linked managers” exhibit a strong bias to invest in stocks of the managers' home countries and attract more flows. Portfolios of stocks from countries in which a fund has a home-field advantage outperform those managed by funds without home-linked managers. We are unable to identify specific sources of an information advantage associated with the home-linked manager's performance. But an analysis of fund flows reveals a role of investor trust in home-linked managers earned primarily through past superior performance.
- DOI
- 10.1016/j.jfineco.2021.11.002
- Volume
- 143
- Issue
- 2
- Pages
- 742-770
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref