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Uncertainty Avoidance and Mutual Funds

Keswani, A. ORCID: 0000-0001-9096-7677, Medhat, M., Miguel, A. F. & Ramos, S. (2020). Uncertainty Avoidance and Mutual Funds. Journal of Corporate Finance, 65, article number 101748. doi: 10.1016/j.jcorpfin.2020.101748


We study how culture influences mutual funds around the world. Uncertainty Avoidance (UA), which is related to ambiguity aversion, is negatively associated with flow-performance sensitivity, deviation from the fund benchmark, fund alpha, and the fraction of active management across the 25 countries in our sample. This is true even when controlling for an exhaustive set of fund- and country-level characteristics. We also find that a fund’s deviation from its benchmark is not only affected by the UA of its domicile country but also by the UA of its fund family’s country of origin. Our results highlight the importance of considering cultural characteristics, and UA in particular, when studying mutual funds across countries.

Publication Type: Article
Additional Information: © 2020. This manuscript version is made available under the CC-BY-NC-ND 4.0 license
Publisher Keywords: Mutual funds; Culture; Uncertainty Avoidance; Fund flows; Ambiguity; Knightian Uncertainty
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
SWORD Depositor:
[thumbnail of Full paper_Culture_September 25.pdf]
Text - Accepted Version
Available under License Creative Commons Attribution Non-commercial No Derivatives.

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