Accounting and Finance Seminar - Andrew Karolyi (Cornell)
G.15, 15-19 Tyndalls Park Road
Is there a home field advantage in global markets?
International equity mutual funds that hire managers from a country linked to the fund’s geographic mandate exhibit a strong bias to invest in stocks of that country. These funds with “home-biased managers” attract
disproportionally more flows and reveal greater flow-performance sensitivity. Stocks domiciled in countries in which the fund has a home-field advantage outperform those held by other funds with investments in those
same countries, but without home-biased managers. We interpret this new finding as evidence of an information-based channel through which the home-bias phenomenon may be revealed and we link it to theories that emphasize the role of an informational endowment advantage.