From the Archives: WOM Affects Holdings and Trades of Money Managers
A mutual fund manager is more likely to buy (or sell) a particular stock in any quarter if other managers in the same city are buying (or selling) that same stock, according to a paper published in the December 2004 issue the Journal of Finance. The effects of WOM were found to be distinct and separate from local preferences. That is, WOM had a greater effect and emerged even when local stocks were completely excluded from the analysis.
Read the paper (PDF download)
