TY - JOUR
T1 - Hedge fund politics and portfolios
AU - DeVault, Luke
AU - Sias, Richard
N1 - Publisher Copyright:
© 2016 Elsevier B.V.
PY - 2017/2/1
Y1 - 2017/2/1
N2 - Consistent with the well-documented relation between political orientation and psychological traits, hedge funds’ political orientations are related to their portfolio decisions. Relative to politically conservative hedge funds, politically liberal hedge funds exhibit a preference for smaller stocks, less mature companies, volatile stocks, unprofitable companies, non-dividend paying companies, and lottery-type securities. Politically liberal hedge funds are also more likely to enter new positions or fully exit existing positions, and make larger adjustments to their U.S. equity market exposure. Our results suggest that psychological characteristics can influence the portfolio decisions of even those at the very top of the financial sophistication ladder.
AB - Consistent with the well-documented relation between political orientation and psychological traits, hedge funds’ political orientations are related to their portfolio decisions. Relative to politically conservative hedge funds, politically liberal hedge funds exhibit a preference for smaller stocks, less mature companies, volatile stocks, unprofitable companies, non-dividend paying companies, and lottery-type securities. Politically liberal hedge funds are also more likely to enter new positions or fully exit existing positions, and make larger adjustments to their U.S. equity market exposure. Our results suggest that psychological characteristics can influence the portfolio decisions of even those at the very top of the financial sophistication ladder.
KW - Hedge funds
KW - Political orientation
KW - Portfolio decisions
KW - Psychology
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U2 - 10.1016/j.jbankfin.2016.10.011
DO - 10.1016/j.jbankfin.2016.10.011
M3 - Article
AN - SCOPUS:84997703798
VL - 75
SP - 80
EP - 97
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
SN - 0378-4266
ER -