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

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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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5. Fund managers’ investment behavior in different market settings: Evidence from Russia, Thailand, and Germany 85

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5 Fund managers’ investment behavior in different market settings: Evidence from Russia, Thailand, and Germany63 5.1 Introduction The global expansion of the asset management industry is reflected in its huge capital inflows and growing numbers of asset management companies. Meanwhile, this applies not only to developed, but also to emerging markets. Thus, fund managers of mutual or pension funds manage steadily growing volumes of assets, which underpins the influence of their asset allocation decisions on securities markets (cf. Ong and Sy, 2004). The notable research interest on institutional investors during the past two decades has been motivated by these actors’ increasing relevance not only for domestic markets, but also worldwide. They have become important contributors to the financial market integration, thereby also bringing destabilization risks to emerging markets during recent crises, i.e. international mutual funds’ large withdrawals from emerging regions (Aitken, 1998, Kaminsky et al., 2001, Gelos and Wei, 2005). Most studies on institutional investors concentrate on aggregated fund flow analyses by investigating mutual fund performance, strategies and price impact.64 Thereby, findings also indicate 63 I would like to thank my co-author Daniela Beckmann. We are grateful to all the fund managers in Russia, Thailand, and Germany who participated in the survey and who were available as interview partners. Besides, financial support by the VolkswagenStif- tung is highly appreciated. Moreover, we thank the Russian National League of Asset Managers “NLU”, the Thai Association of Investment Management Companies “AIMC”, and the German Investment Association “BVI” for great recommendation let- ters and...

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