Local Religious Beliefs and Mutual Fund Risk-Taking Behaviors

Tao Shu (), Johan Sulaeman () and P. Eric Yeung ()
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Tao Shu: Department of Banking and Finance, Terry College of Business, University of Georgia, Athens, Georgia 30602
Johan Sulaeman: Finance Department, Edwin L. Cox School of Business, Southern Methodist University, Dallas, Texas 75205
P. Eric Yeung: J.M. Tull School of Accounting, Terry College of Business, University of Georgia, Athens, Georgia 30602; and Samuel Curtis Johnson Graduate School of Management, Cornell University, Ithaca, New York 14853

Management Science, 2012, vol. 58, issue 10, 1779-1796

Abstract: We study the effects of local religious beliefs on mutual fund risk-taking behaviors. Funds located in low -Protestant or high -Catholic areas exhibit significantly higher fund return volatilities. Similar differences persist when we use the religiosity ratios at fund managers' college locations. Risk-taking associated with local religious beliefs manifests in higher portfolio concentrations, higher portfolio turnover, more aggressive interim trading, and more "tournament" risk-shifting behaviors, but not over-weighting risky individual stocks. Overall, our results suggest that local religious beliefs have significant influences on mutual fund behaviors. This paper was accepted by Brad Barber, finance.

Keywords: risk-taking; mutual funds; geographic location; religion (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (81)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:58:y:2012:i:10:p:1779-1796

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