Mutual fund herding and reputational concerns

Marius Popescu () and Zhaojin Xu ()
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Marius Popescu: Northeastern University
Zhaojin Xu: University of Massachusetts Dartmouth

Journal of Economics and Finance, 2018, vol. 42, issue 3, No 7, 550-565

Abstract: Abstract The article examines whether mutual fund managers’ career concerns contribute to their herding behavior. We find that mutual funds herd, on average, 71% more in down markets than in up markets. Furthermore, we find that poorly performing funds herd, on average, 17% more than well performing funds, and that this pattern is the result of poorly performing funds that herd, on average, 110% more in down markets relative to up markets. Our evidence is consistent with the argument that poorly performing managers have stronger career concerns, and particularly so in down markets.

Keywords: Mutual funds; Herding behavior; Career concerns (search for similar items in EconPapers)
JEL-codes: G11 G14 G23 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s12197-017-9405-y

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