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Why Do Fund Managers Identify and Share Profitable Ideas?

  • Steven S. Crawford, Wesley R. Gray and Andrew E. Kern


We study data from an organization in which fund managers privately share and discuss detailed investment recommendations. Buy recommendations generate positive abnormal returns, and sell recommendations result in negative abnormal returns. In the context of these results, we explore an important economic question: Why do skilled investors share profitable ideas with others? Evidence suggests that the managers in our sample share to receive feedback on their ideas and to attract additional arbitrageur capital to the securities they recommend in order to correct mispricings.


Corresponding author

* Crawford (corresponding author),, Bauer College of Business, University of Houston; Gray,, Lebow College of Business, Drexel University; and Kern,, Trulaske College of Business, University of Missouri.


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We thank Daniel Bergstresser, Dave Carlson, Hui Chen, John Cochrane, Lauren Cohen, Eugene Fama, Cliff Gray, Ron Howren, Carl Luft, Stavros Panageas, Gil Sadka, Shastri Sandy, Amir Sufi, Pietro Veronesi, and Rob Vishny. We also thank seminar participants at the University of Chicago, Texas A&M University, Southern Methodist University, Drexel University, Ohio State University, the University of Virginia, the University of Washington, and Boston College. We also thank Stephen Brown (the editor) and Paolo Pasquariello (the referee) for helpful suggestions.



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