In:
Korean Journal of Financial Studies, Korean Securities Association, Vol. 50, No. 6 ( 2021-12-31), p. 557-592
Abstract:
We investigate why fund managers invest in lottery-like stocks and whether the behavior that holds more lottery-like stocks affects performance. First, mutual funds that hold more lottery stocks may attract more fund flows. Our results support the theory that fund managers invest more in lottery-like stocks to reflect investors' preferences for extreme payoffs. Second, the level of lottery-like characteristics of mutual funds does not predict managers’ skill and performance. Therefore, fund managers holding more lottery stocks is not a result of managers’ skills. Third, lottery-like characteristics of mutual funds do not significantly affect performance in specific reporting periods (e.g., year-end or quarter-end). Based on this result, we conclude that fund managers do not invest more in lottery stocks to advance their career.
Type of Medium:
Online Resource
ISSN:
2005-8187
,
2713-5543
DOI:
10.26845/KJFS.2021.12.50.6.557
Language:
English
Publisher:
Korean Securities Association
Publication Date:
2021
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