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Essays on International Asset Management: Evidence for Developed West and Emerging East


Marina Nikiforow

Asset management is a global business, spreading from developed financial centers to emerging and transition markets. Empirical analyses of professional investors’ investment processes are justified not only by their key role in the traditional finance theory, as rational agents contributing to market efficiency, but also by the behavioral finance, finding evidence on irrational biases in their investment behavior. This study provides survey evidence on views and investment behavior of 772 fund managers from 274 investment companies in the USA, Germany, Thailand, Russia and Ukraine. New insights are gained on the persistency of behavioral biases. Cross-country comparisons shed light on fund managers’ information processing and investment behavior in different institutional market settings.


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3. Does training on behavioral finance influence fund managers’ perception and behavior? 31


3. Does training on behavioral finance influence fund managers’perception and behavior?20 3.1 Introduction Psychologists argue that behavioral biases are difficult to overcome even with the knowledge of their existence (Pronin et al., 2002). From several studies we know that financial experts such as brokers, investment bankers or fund managers are subject to Behavioral Finance (BF) biases which negatively affect their performance (see e.g. Biais et al., 2005). As financial experts typically act fiduciarily, are monitored and paid for good performance, they, in fact, have stronger incentives to learn rational behavior. However, experts’ sophistication and trading experience may diminish but still fail to eliminate biases such as e.g. the disposition effect (Shapira and Venezia, 2001, Feng and Seasholes, 2005, Visaltanachoti et al., 2007)21. Studies directly comparing the behavior of professionals and students unveil that professionals often behave even more overconfidently (Glaser et al., 2005) or exhibit a greater extent of myopic loss aversion than students (Haigh and List, 2005). This paper ties up to the discussion on the persistence of behavioral anomalies in the behavior of financial professionals.22 It analyzes the influence 20 This paper was originally published in Applied Financial Economics 20:7, 515-528, under the title “Does training on behavioural finance influence fund managers’ percep- tion and behaviour?” and is reproduced by kind permission of Taylor & Francis (Routledge). The Journal's web site is I would like to thank all participating fund managers for their time and commitment. I thank Lukas Menkhoff, the participants of the...

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