The Disposition of Fund Managers – Saudi Evidence

I replicate an experimental design to document the disposition effect among a sample of Saudi fund managers and test the related sunk-cost predictions of Baucells and Hwang's (2014) MARA. My contribution to the extant literature is threefold: [1] studying prospect preferences of fund managers where the separation between strategies and capital is most accentuated, [2] testing MARA's sunk-cost predictions in a financial context, and [3] reporting a recency parameter. The study in this fashion supplements, with international evidence, the literature on investors' loss aversion. Besides individual and institutional investors, fund managers play a major role in motivating the theory and in allocating capital to opportunities