Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146776
Authors: 
Jaspersen, Stefan
Year of Publication: 
2016
Series/Report no.: 
CFR Working Paper 16-07
Abstract: 
I provide evidence that fund managers who overweight firms with the most differentiated products ('monopolies') exhibit a superior risk-adjusted performance. This is consistent with information advantages due to a better understanding of qualitative information on a firm's competitive environment. I find that funds with above median monopoly bets outperform by up to 92 basis points annually and trade more successfully in both their monopoly and nonmonopoly sub-portfolios. My identification strategy includes exogenous shocks to information quality using the Sarbanes-Oxley Act and to a firm's product market environment using the 9/11 terrorist attacks. I document that managers who place larger monopoly bets are less likely to invest into rival firms at the same time, have a longer investment horizon, and hold more illiquid and high quality stocks.
Subjects: 
Mutual fund performance
Information production
Fund manager skill
Investment behavior
Product market competition
JEL: 
G11
G12
G14
G23
L11
Document Type: 
Working Paper

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