Stock repurchasing bias of mutual funds


Du, Mengqiao ; Niessen-Ruenzi, Alexandra ; Odean, Terrance



DOI: https://doi.org/10.2139/ssrn.3247066
URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_i...
Additional URL: https://editorialexpress.com/cgi-bin/conference/do...
Document Type: Working paper
Year of publication: 2018
The title of a journal, publication series: SSRN Working Paper Series
Place of publication: Rochester, NY
Publication language: English
Institution: Business School > ABWL u. Corporate Governance (Niessen-Ruenzi 2012-)
Subject: 650 Management
Abstract: This paper investigates whether the positive emotions mutual fund managers have when they have sold a stock for a gain lead to a higher repurchasing probability of this stock in the future. Controlling for fund, stock, and time fixed effects, we show that the probability of a stock being repurchased by a mutual fund is on average around 17% higher if it was previously sold for a gain rather than for a loss. The effect is less pronounced if the stock price has increased after the sale of the stock, which may cause regret and a negative feeling that the stock has been sold in the first place. In line with positive emotions driving the repurchasing behavior, we find that when fund managers change jobs and work at a different fund, they still prefer to repurchase stocks that they sold for a gain at the fund they managed before. We find supportive evidence that this behavior is associated with lower fund performance: repurchased winners underperform repurchased losers by around 5% p.a. after the repurchase. Thus, investors should be aware that mutual fund managers' repurchasing decisions can be biased and eventually may hurt their performance.

Dieser Eintrag ist Teil der Universitätsbibliographie.




+ Citation Example and Export

Du, Mengqiao ; Niessen-Ruenzi, Alexandra ORCID: 0000-0002-9493-8280 ; Odean, Terrance (2018) Stock repurchasing bias of mutual funds. SSRN Working Paper Series Rochester, NY [Working paper]


+ Search Authors in

+ Page Views

Hits per month over past year

Detailed information



You have found an error? Please let us know about your desired correction here: E-Mail


Actions (login required)

Show item Show item