סמינר במימון חשבונאות
Mutual Fund Performance and Overpriced Stocks
Speaker:Prof. Doron Avramov
Joined work with: Si Cheng, and Allaudeen Hameed
Abstract:
We find a strong negative relation between the propensity of active mutual funds to hold overpriced stocks and their subsequent performance. High-propensity funds, or overpriced funds, display poor stock picking skills as they further purchase overpriced stocks during episodes of fund inflows, even when such stocks display low expected returns. Moreover, overpriced funds attract considerable capital inflows during high sentiment episodes, after controlling for the effects of past fund performance, especially funds displaying lottery-like characteristics. Eventually, overpriced funds are accountable for the negative performance characterizing the mutual fund industry.
The article is available from the finance-accounting seminar website:
