Overconfidence Among Professional Investors: Evidence from Mutual Fund Managers
Year: 2011
Type: article
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.
Authors: Alexander Puetz, Stefan Ruenzi
Institutions: University of Mannheim, University of Cologne
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2102258199