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Local Religious Beliefs and Mutual Fund Risk-Taking Behaviors

Author

Listed:
  • Tao Shu

    (Department of Banking and Finance, Terry College of Business, University of Georgia, Athens, Georgia 30602)

  • Johan Sulaeman

    (Finance Department, Edwin L. Cox School of Business, Southern Methodist University, Dallas, Texas 75205)

  • P. Eric Yeung

    (J.M. Tull School of Accounting, Terry College of Business, University of Georgia, Athens, Georgia 30602; and Samuel Curtis Johnson Graduate School of Management, Cornell University, Ithaca, New York 14853)

Abstract

We study the effects of local religious beliefs on mutual fund risk-taking behaviors. Funds located in low -Protestant or high -Catholic areas exhibit significantly higher fund return volatilities. Similar differences persist when we use the religiosity ratios at fund managers' college locations. Risk-taking associated with local religious beliefs manifests in higher portfolio concentrations, higher portfolio turnover, more aggressive interim trading, and more "tournament" risk-shifting behaviors, but not over-weighting risky individual stocks. Overall, our results suggest that local religious beliefs have significant influences on mutual fund behaviors. This paper was accepted by Brad Barber, finance.

Suggested Citation

  • Tao Shu & Johan Sulaeman & P. Eric Yeung, 2012. "Local Religious Beliefs and Mutual Fund Risk-Taking Behaviors," Management Science, INFORMS, vol. 58(10), pages 1779-1796, October.
    • Handle: RePEc:inm:ormnsc:v:58:y:2012:i:10:p:1779-1796
    DOI: 10.1287/mnsc.1120.1525
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    References listed on IDEAS

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