Overconfidence among professional investors: Evidence from mutual fund managers

Alexander Pütz and Stefan Ruenzi

No 08-08 [rev.], CFR Working Papers from University of Cologne, Centre for Financial Research (CFR)

Abstract: We examine overconfidence among equity mutual fund managers. While overconfidence has been extensively documented among retail investors, evidence from professional investors is scarce. Consistent with theories of overconfidence, we find that fund managers trade more after good past performance. The higher trading activity after good performance is driven by individual portfolio performance, while the market performance has no significant impact. We rule out some alternative explanations for our results like increased trading as a response to tournament incentives, as a response to inflows, or as a rational reaction due to managerial learning about abilities.

Keywords: professional investors; overconfidence; behavioral biases; mutual funds (search for similar items in EconPapers)
JEL-codes: D83 G10 G12 (search for similar items in EconPapers)
Date: 2010
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Related works:
Journal Article: Overconfidence Among Professional Investors: Evidence from Mutual Fund Managers (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfrwps:0808r

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