Political Cognitive Biases Effects on Fund Managers' Performance

Marian Moszoro

MPRA Paper from University Library of Munich, Germany

Abstract: Does political affiliation matter for stock-market investing? Rare events can produce polarized narratives that potentiate cognitive dissonance on a spectrum of agents. Using a comprehensive dataset of equity hedge funds' performance and managers' political affiliation matched by their partisan contributions, I document higher returns of funds managed by Democrats for ten subsequent months—from December 2008 to September 2009—when the interpretation of the US central bank policy was politically polarized and conducive to cognitive dissonance. This result is robust to a set of falsification tests and randomized quasi-experiments.

Keywords: Political Biases; Money Managers' Performance (search for similar items in EconPapers)
JEL-codes: D72 G11 G14 (search for similar items in EconPapers)
Date: 2020-05-28
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Published in Journal of Behavioral Finance Forthcoming (2020): pp. 2-19

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Related works:
Journal Article: Political Cognitive Biases Effects on Fund Managers’ Performance (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:101572

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