Does Social Interaction Spread Fear Among Institutional Investors? Evidence from Coronavirus Disease 2019

• 成果类型: Article; Early Access
• 署名作者: Au, Shiu-Yik; Dong, Ming; Zhou, Xinyao
• 署名单位: University of Manitoba; York University - Canada; Ontario Tech University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.4814
• 发表日期: 2023
• 关键词: Social networks; Facebook social connectedness index; Covid-19; salience bias; institutional investors

摘要

We study how social connectedness affected active mutual fund manager trading behavior in the first half of 2020. In the first quarter during which the coronavirus disease 2019 (COVID-19) outbreak occurred, fund managers located in or socially connected to COVID-19 hotspots sold more stock holdings compared with a control group of unconnected managers. The economic impact of social connectedness on stock holdings was comparable with that of COVID-19 hotspots and was elevated among epicenter stocks most susceptible to the pandemic shock. In the second quarter, social interaction had an overall negative effect on fund performance, but this effect depended on manager skill; unskilled managers who were connected to the hotspots underperformed, whereas skillful managers suffered no deleterious effect. Our evidence suggests that social connections can intensify salience bias for all but the most skilled institutional investors, and policy makers should be wary of the destabilizing role of social networks during market downturns.