The Quality of Your Network Matters: Professional Connections and Mutual Fund Performance

Authors

  • Jimmy Chien Southern Arkansas University
  • Jun Duanmu Seattle University
  • William R. McCumber Louisiana Tech University

DOI:

https://doi.org/10.33423/jabe.v25i3.6335

Keywords:

business, economics, mutual funds, network centrality, performance evaluations, performance predictions

Abstract

We examine whether the professional networks of mutual fund managers serve as a conduit of information that benefits fund investors. We find investors enjoy higher returns when their funds are led by well-connected managers. A long-short portfolio strategy of funds ranked upon the quality of fund managers’ networks yields positive and statistically significant mean and risk-adjusted returns to investors for both in-sample and out-of sample testing. The results suggest that manager networks enable information flows that benefit fund investors. Additionally, we present evidence that fund managers do not act on material non-public information gathered from contemporaneous board appointments.

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Published

2023-08-25

How to Cite

Chien, J., Duanmu, J., & McCumber, W. R. (2023). The Quality of Your Network Matters: Professional Connections and Mutual Fund Performance. Journal of Applied Business and Economics, 25(3). https://doi.org/10.33423/jabe.v25i3.6335

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Section

Articles