Local Religious Beliefs and Mutual Fund Risk-Taking Behaviors
Tao Shu, Johan Sulaeman, P. Eric Yeung
Management Science · 2012 · Volume 58 · Issue 10
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
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