Speed of Information Diffusion within Fund Families

Abstract

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Family competition via divergence in the trading of funds

“…Thus, we highlight a significantly positive effect of a cooperative environment on fund family performance when this cooperation leads them to be different from other fund families. This finding is in line with Fu et al (2012) who find a significantly positive influence of the degree of information sharing and the common access to resources on performance inside the fund family, and it provides additional light to the benefits of internal cooperation that according to Cici et al (2017) outweigh the associated free-riding costs. 6…”

“…We show a significantly positive impact of cooperation within the family when it leads to a high differentiation from other families. Therefore, our findings also contribute to the literature on the benefits of cooperative behaviour within a family as shown by Cici et al (2017). Third, this paper contributes to the literature about the probability of the transmission of financial difficulties.…”

Knowledge spillovers in the mutual fund industry through labor mobility

“…In particular, we deem information barriers within recipient fund families to be highly relevant in this context. This is supported by previous research; for example, Cici, Jaspersen, and Kempf (2017) document that weaker information barriers lead to a higher speed of information dissemination among mutual fund managers of the same family. We hypothesize that lower information barriers within the recipient family strengthen the extent to which the organization capital knowledge of the switching manager is absorbed and thus intensify knowledge spillovers through labor mobility.…”

Diseconomies of Scale in Quantitative and Fundamental Investment Styles

“…Table 6 shows measures of information diffusion (ID) following Cici et al (2017) within SA firms separately for i) firms majorly (>50%) managing quantitative separate accounts (SAs) versus fundamental SAs, ii) Initial Buys majorly made by quantitative versus fundamental SAs, and iii) Following Buys majorly made by quantitative versus fundamental SAs, in the period from Jan. 2001 to Dec. 2019. Higher values of ID denote higher speed of Information Diffusion.…”

“…First, we look at the speed of information diffusion within SA firms as a proxy for low hierarchy and information processing costs. We estimate information diffusion following the method of Cici, Jaspersen, and Kempf (2017). 9 If quant SA firms use hard information to a higher degree and their investment decision process involves fewer or even no feedback loops, we would expect information to diffuse faster through quant firms than through fundamental ones.…”