We study whether investors' demographic similarity to CEOs affects their investment decisions. Mutual fund managers are found to overweight firms led by CEOs who resemble them in terms of age, ethnicity and gender. This finding is robust to excluding educational and local ties and is supported by variation in similarity caused by CEO departures. Investing in firms run by similar CEOs, on average, is associated with superior performance and is more pronounced when uncertainty is higher. Results suggest that demographic similarity to CEOs facilitates informed trading. They further suggest that CEOs matter to investors.
CEO-investor similarity familiarity bias information advantages investment decisions mutual fund performance