Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/229929 
Year of Publication: 
2021
Series/Report no.: 
CFR Working Paper No. 16-07
Version Description: 
February 10, 2021
Publisher: 
University of Cologne, Centre for Financial Research (CFR), Cologne
Abstract: 
Taking a firm's competitive position into account benefits investors who are better at evaluating this qualitative information. I find that fund managers who overweight companies with market power outperform their peers. Placebo exercises and an exogenous shock to product market competition around the 9/11 terrorist attacks support this finding. Managers with larger bets on market power are more experienced and long-term oriented. They pursue more illiquid investment strategies, select superior innovators, and more actively avoid competition within their portfolio. My findings show how managers with a superior information production utilize hard-to-process information about industrial organization when picking stocks.
Subjects: 
Mutual fund performance
Information production
Qualitative information
Product market competition
JEL: 
G11
G12
G14
G23
L11
Document Type: 
Working Paper

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