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Limited attention, managerial multitasking, and hedge fund performance in China

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  • Li, Lu
  • Li, Yang
  • Wang, Xueding
  • He, Yuqian

Abstract

Using a database of hedge funds in China, this paper examines the impact of limited attention by analysing the performance of hedge fund managers who are distracted by managing multiple funds simultaneously, or managerial multitasking. We perform an empirical analysis on a sample of 1031 hedge fund managers in China over the period from April 2010 to December 2017. We find that managers who multitask have lower returns, lower alpha, and lower overall performance. We investigate the impact of the switch from single-tasking to multitasking on the fund performance and our results support the attention distraction hypothesis, but not in favor of the effort diversion or synergy creation hypothesis. Moreover, we find that the practice of multitasking has a negative impact on fund performance during a bull market. Further, we find that multitasking managers have lower performance if they use multiple strategies in fund activities or serve on the management team at fund companies.

Suggested Citation

  • Li, Lu & Li, Yang & Wang, Xueding & He, Yuqian, 2021. "Limited attention, managerial multitasking, and hedge fund performance in China," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:pacfin:v:67:y:2021:i:c:s0927538x21000755
    DOI: 10.1016/j.pacfin.2021.101568
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    Cited by:

    1. Hong, Xin & Pang, Ningjing & Wang, Zhibin, 2022. "Stop-loss early termination clause and hedge fund performance," Pacific-Basin Finance Journal, Elsevier, vol. 75(C).

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    More about this item

    Keywords

    Limited attention; Managerial multitasking; China hedge fund performance; Hedge fund managers;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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