Why Do Fund Families Release Underperforming Incubated Mutual Funds?

Although the average incubated mutual fund outperforms nonincubated funds by up to 3.41% annually, a large number of released funds underperform during incubation. We find that launching underperforming incubated mutual funds is associated with objectives that attract large inflows and lower relative risk. These findings are consistent with the use of incubation to maximize fee revenue through means other than the flow‐to‐performance relationship. We also find that underperforming incubated funds are incubated longer suggesting that families release funds opportunistically to take advantage of outperformance when it is observed.     

Human capital depletion, human capital formation, and migration: a blessing or a “curse”?

We specify conditions under which a strictly positive probability of employment in a foreign country raises the level of human capital formed by optimizing workers in the home country. While some workers migrate, “taking along” more human capital than if they had migrated without factoring in the possibility of migration (a form of brain drain), other workers stay at home with more human capital than they would have formed in the absence of the possibility of migration (a form of brain gain).     

Twitter activity,investor attention,and the diffusion of information

We examine the impact of Twitter attention on stock prices by examining over 21 million company‐specific tweets over a 5‐year period. Through a quasi‐natural experiment identifying official Twitter outages, we find that Twitter influences stock trading, especially among small, less visible securities primarily traded by retail investors. In addition, we determine that Twitter activity is associated with positive abnormal returns and when tweets occur in conjunction with traditional news events, more information is spread to investors. Finally, we show that retail investor activity drives the Twitter effect as institutional investors less actively trade the affected stocks.     

What happened to regional inequality in Britain in the twentieth century?

New estimates of regional GDP for Great Britain in the twentieth century differ from those of Crafts but confirm his hypothesis of a U‐shaped regional inequality curve between 1911 and 2001. Comparison of these estimates with revised estimates for 1861–1911 suggests that the decline in inequality in the first half of the twentieth century forms part of a trend of declining regional inequality and catch‐up of the poorer regions with the richest (the South East) dating back to the 1860s at least. This convergence trend was interrupted by the First World War and the subsequent difficulties of Outer Britain in the 1920s when the gap between the South East and the rest widened. However, sometime after 1931 it picked up again. Since 1971 inequality has worsened and catch‐up has stopped; indeed, there has been divergence of the South East from the rest. This divergence has been especially marked since 1991. Although growth for all regions was faster during the period of increasing regional inequality that encompasses the second half of the twentieth century, the golden age of economic growth for regions outside the South East occurred during the long boom following the Second World War.     

Loss persistence and returns in the UK

In this study, we examine whether estimated loss reversal probabilities are fully reflected in UK stock market prices. Overall, we provide evidence of varying degrees and types of loss firm mispricing with respect to estimated loss reversal probabilities. In particular, a significant and positive relationship between loss reversal probability and annual returns is found only for firms with higher trading costs. When looking at monthly returns, however, especially for the financial statement release month subsequent to the loss year, a significant and positive relationship is found for all firms. Thus, the evidence is consistent with UK market participants not fully incorporating relevant information into the pricing of loss firms and, as a consequence, being surprised by the content of the earnings for many or all UK loss firms.