Finance

Information asymmetry

Sociology

Business

Population

Corporate governance

Fund administration

Geographical distance

Demography

Open-end fund

Market liquidity

Institutional investor

Mutual fund

Fund of funds

Closed-end fund

Journal of Financial and Quantitative Analysis

Using detailed data on company visits by Chinese mutual funds, we provide direct evidence of mutual fund information acquisition activities and the consequent informational advantages mutual funds establish in local firms. Mutual funds are more likely to visit local and nearby firms both in and outside of their portfolios, but the ease of travel between fund and firm locations can substantially alleviate geographic distance constraints. Company visits by mutual funds are strongly associated with both fund trading activities and fund trading performance. Our results show that geographic constraints and costly information acquisition amplify information asymmetry in financial markets.

The Geography of Information Acquisition