TY  - JOUR
AU  - Cohen,Lauren
AU  - Frazzini,Andrea
AU  - Malloy,Christopher
TI  - The Small World of Investing: Board Connections and Mutual Fund Returns
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13121
PY  - 2007
Y2  - May 2007
UR  - http://www.nber.org/papers/w13121
L1  - http://www.nber.org/papers/w13121.pdf
N1  - Author contact info:
Lauren Cohen
Harvard Business School
Baker Library 273
Soldiers Field
Boston, MA 02163
Tel: 617/495-3888
E-Mail: lcohen@hbs.edu

Andrea Frazzini
AQR Capital Management, LLC
Two Greenwich Plaza, 3rd Floor
Greenwich, CT 06830
Tel: 203 742 3894
E-Mail: andrea.frazzini@aqr.com

Christopher Malloy
Harvard Business School
Baker Library 277
Soldiers Field
Boston, MA 02163
Tel: 617/495-4383
E-Mail: cmalloy@hbs.edu
AB  - This paper uses social networks to identify information transfer in security markets. We focus on connections between mutual fund managers and corporate board members via shared education networks. We find that portfolio managers place larger bets on firms they are connected to through their network, and perform significantly better on these holdings relative to their non-connected holdings. A replicating portfolio of connected stocks outperforms a replicating portfolio of non-connected stocks by up to 8.4% per year. Returns are concentrated around corporate news announcements, consistent with mutual fund managers gaining an informational advantage through the education networks. Our results suggest that social networks may be an important mechanism for information flow into asset prices.
ER  -