| 简介： | Does political partisanship shape the investment performance of professional fund managers? We find that hedge funds that hold stocks that are strongly aligned with the incumbent president's economic policies underperform funds that hold stocks that are poorly aligned with the incumbent president's economic policies by 4.44% per year after adjusting for risk. In line with a partisanship bias story, our findings are driven by managers who are politically aligned with the incumbent president and stronger when (a) fund managers are highly partisan, (b) sentiment diverges between Democrats and Republicans, and (c) conflicts occur between the President and US Congress. Following exogenous shocks that heighten partisan bias such as mass shootings and political protests, politically aligned funds increase their exposures to politically aligned stocks, leading to greater underperformance. Our results extend to mutual funds and suggest that political partisanship can be detrimental for investment management.
|