Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/214658 
Year of Publication: 
2020
Series/Report no.: 
CFR Working Paper No. 17-02
Version Description: 
This Draft: March 2020
Publisher: 
University of Cologne, Centre for Financial Research (CFR), Cologne
Abstract: 
This study provides evidence that investors' demographic similarity to CEOs facilitates informed trading after accounting for selective distribution of information. Mutual fund managers overweight firms whose CEOs resemble them in terms of age, ethnicity, and gender. Significantly higher trade performance in the sub-portfolio of similar CEOs indicates that this overweighting reflects informational advantage. Consistently, for similar CEOs, fund managers are better able to identify valuable CEO-firm matches and firms with positive future earnings. The evidence supports theories of screening discrimination according to which in-group bias is a rational response to asymmetric information and has implications for fund manager diversity.
Subjects: 
CEO-investor demographic similarity
fund manager diversity
in-group bias
informational advantage
investment decisions
mutual fund performance
screening discrimination
JEL: 
G11
G23
J10
Document Type: 
Working Paper

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