Thy neighbor's portfolio: Word-of-mouth effects in the holdings and trades of money managers

Harrison Hong, Jeffrey D. Kubik, Jeremy C. Stein

Research output: Contribution to journalArticle

264 Scopus citations

Abstract

A mutual fund manager is more likely to buy (or sell) a particular stock in any quarter if other managers in the same city are buying (or selling) that same stock. This pattern shows up even when the fund manager and the stock in question are located far apart, so it is distinct from anything having to do with local preference. The evidence can be interpreted in terms of an epidemic model in which investors spread information about stocks to one another by word of mouth.

Original languageEnglish (US)
Pages (from-to)2801-2824
Number of pages24
JournalJournal of Finance
Volume60
Issue number6
DOIs
StatePublished - Dec 1 2005

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ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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