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Publications
  • July 2014
  • Article
  • Journal of Financial Economics

Winners in the Spotlight: Media Coverage of Fund Holdings as a Driver of Flows

By: David H. Solomon, Eugene F. Soltes and Denis Sosyura
  • Format:Print
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Abstract

We show that media coverage of mutual fund holdings affects how investors allocate money across funds. Controlling for fund performance, fund holdings with high past returns attract extra flows only if these stocks were recently featured in major newspapers. In contrast, holdings that were not covered in the media do not affect flows. We present evidence that media coverage tends to amplify investors' chasing of past returns rather than facilitate the processing of useful information in fund portfolios. Fund managers exploit this behavior by purchasing media-covered past winners at reporting dates, a strategy most prevalent among poorly performing funds. Our evidence suggests that media coverage can exacerbate investor biases and that it is the primary mechanism that makes window-dressing effective.

Keywords

Prejudice and Bias; Media; Investment Funds; Financial Services Industry

Citation

Solomon, David H., Eugene F. Soltes, and Denis Sosyura. "Winners in the Spotlight: Media Coverage of Fund Holdings as a Driver of Flows." Journal of Financial Economics 113, no. 1 (July 2014): 53–72.
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About The Author

Eugene F. Soltes

Accounting and Management
→More Publications

More from the Authors

    • 2022
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    Corporate Criminal Investigations and Prosecutions

    By: Leo R. Tsao, Daniel S. Kahn and Eugene F. Soltes
    • December 2021
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    Should I Stay or Should I Go? Assessing Risk in Carlos Ghosn's International Escape

    By: Eugene F. Soltes, Grace Liu and Muneeb Ahmed
    • Journal of Empirical Legal Studies

    Is ‘Not Guilty’ the Same as ‘Innocent’? Evidence from SEC Financial Fraud Investigations

    By: Eugene F. Soltes and David H. Solomon
More from the Authors
  • Corporate Criminal Investigations and Prosecutions By: Leo R. Tsao, Daniel S. Kahn and Eugene F. Soltes
  • Should I Stay or Should I Go? Assessing Risk in Carlos Ghosn's International Escape By: Eugene F. Soltes, Grace Liu and Muneeb Ahmed
  • Is ‘Not Guilty’ the Same as ‘Innocent’? Evidence from SEC Financial Fraud Investigations By: Eugene F. Soltes and David H. Solomon
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