Social interactions in investment decisions: Evidence from fund managers' common site visits

Abstract

This paper investigates how social interactions among fund managers influence their investment decisions. Exploiting a unique dataset of corporate site visits in China, we document that managers who co-attend site visits exhibit significantly greater portfolio similarity subsequently, with the estimated incremental same-day effect implying an increase in holding overlap equal to 7.56% of the sample mean. To mitigate concerns that such alignment reflects pre-existing shared preferences or common information environments, we employ multiple identification strategies, including extensive controls, high-dimensional fixed effects, and a falsification test based on future co-visits. The effect is larger for repeated co-visits, consistent with a trust-based mechanism of information exchange. Further analysis of trading patterns reveals that co-visiting managers exhibit greater similarity in trades, a greater propensity to invest in opaque stocks, and superior risk-adjusted returns, suggesting that these co-visits facilitate the exchange of economically relevant private information.