拉斯维加斯9888

Finance Seminar（2015-40）

Topic:Mutual Funds' Reputation for Information Superiority

Speaker:Xi Weng, Peking University

Time:Wednesday, 23 December, 09:30-10:30

Location:Room 216, Guanghua Building 2

Abstract:

We study the effects of mutual funds' reputations on information acquisition. Funds endogenously invest in reputations by acquiring information, therefore they lack exogenous types. There exists a star rating equilibrium in which investors' beliefs are consistent with a discrete rating system. In an equilibrium, within a rating group, higher ranked uninformed funds are less likely to acquire information, leading to an “intra-group catch-up” effect. Across rating groups, funds' incentives jump. Rational investors may merely rely on ratings to pick funds. We relate funds' activeness to their past and future performance, and provides rational explanations for empirical observations about Morningstar Ratings.

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