Alumni network, mutual fund herding and information spillover: Evidence from China

Abstract

This paper studies the influence of alumni connections on mutual fund herding behavior. We find funds with alumni connections have significantly more overlap in holdings, purchases, and sales than funds without connections. Based on the perspective of information spillover effect, further research find alumni fund managers are more likely to conduct corporate site visit together, and shared stocks held by alumni funds have higher probability of positive earnings surprise. The performance of funds with alumni connections are more related and are more likely to suffer unsystematic shocks simultaneously. Our findings reveal the importance of alumni networks in assets management industry.