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- Title
To see is to believe: Corporate site visits and mutual fund herding.
- Authors
Quan, Xiaofeng; Xiang, Cheng; Li, Donghui; Tan, Kelvin Jui Keng
- Abstract
Using a unique data set of corporate site visits by mutual funds to Chinese firms listed on the Shenzhen Stock Exchange from 2013 to 2021, we find that firms with visits (more visits) are associated with lower mutual fund herding than those with no (fewer) visits. In addition, we demonstrate that mutual funds' visits to a firm drive the change in their herding propensity by verifying hard information (e.g., the firm's technology, innovation, accounting, and finance information) and obtaining soft information (e.g., management's risk appetite, employee morale, and corporate culture). Furthermore, corporate site visits are found to strengthen herding's price impact without return reversals. Overall, our results are consistent with information cascade theory.
- Subjects
SHENZHEN zheng quan jiao yi suo; MUTUAL funds; STOCK funds; ANIMAL herds; EMPLOYEE morale; CORPORATE culture; ASSET-liability management; PRICES
- Publication
Financial Management (Wiley-Blackwell), 2023, Vol 52, Issue 4, p711
- ISSN
0046-3892
- Publication type
Article
- DOI
10.1111/fima.12421