When school ties meet geography: Education-province bias in mutual fund portfolios

Quanxi Liang, Qi Jin, Meiting Lu and Yaowen Shan

Journal of Banking & Finance, 2023, vol. 157, issue C

Abstract: Fund managers tilt towards stocks from the location of their tertiary education (education province). We find that, compared with their peers, fund managers overweight stocks headquartered in their education provinces. This overweighting differs from other biases, such as local bias, hometown bias, and educational ties, and is detrimental to fund performance. Funds with more education-province bias have poorer fund performance and higher idiosyncratic risk than those with less bias. Further analysis shows that education-province bias is more evident during poor market times, among underperforming funds, for stocks with less information asymmetry, in economically depressed provinces, and when fund managers are educated at lower-ranked institutes. Overall, our findings suggest that education-province bias is largely attributed to fund managers’ familiarity bias.

Keywords: Fund managers; Portfolio allocation; Educational backgrounds; Familiarity bias (search for similar items in EconPapers)
JEL-codes: G11 G23 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:157:y:2023:i:c:s0378426623002121

DOI: 10.1016/j.jbankfin.2023.107021

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