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The State of Origin of Australian Equity: Does Active Fund Manager Location Matter?

Author

Listed:
  • Kingsley Fong

    (Faculty of Business, The University of New South Wales, Sydney, NSW 2052.)

  • David R. Gallagher

    (Faculty of Business, The University of New South Wales, Sydney, NSW 2052.)

  • Adrian D. Lee

    (Faculty of Business, The University of New South Wales, Sydney, NSW 2052.)

Abstract

We examine the relation of active equity fund managers' location proximity to a stock's headquarter and fund managers' stock selection skill and investment behaviour using a representative sample of Australian institutional equity funds. Contrary to the findings of much international research, our study reveals evidence which is inconsistent with a location advantage for Melbourne and Sydney active equity funds. Both Melbourne and Sydney fund managers overweight Melbourne stocks, exhibit skill in picking Sydney stocks and avoid poor performing Melbourne and Sydney stocks. In addition, we find no evidence of word-of-mouth trading effects in Melbourne or Sydney funds. Taken together, this suggests information asymmetries arising from location are weak for Melbourne and Sydney funds.

Suggested Citation

  • Kingsley Fong & David R. Gallagher & Adrian D. Lee, 2008. "The State of Origin of Australian Equity: Does Active Fund Manager Location Matter?," Australian Journal of Management, Australian School of Business, vol. 32(3), pages 503-523, March.
    • Handle: RePEc:sae:ausman:v:32:y:2008:i:3:p:503-523
    DOI: 10.1177/031289620803200307
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    References listed on IDEAS

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    Cited by:

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    3. Sarah Osborne & Dean Katselas & Larelle Chapple, 2012. "The preferences of private equity investors in selecting target acquisitions: An international investigation," Australian Journal of Management, Australian School of Business, vol. 37(3), pages 361-389, December.

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