2019/10/22 by LEONARD KOSTOVETSKY, Leonard Kostovetsky, JEROLD B. WARNER +1 · 100 citations
Business, Management and Accounting · Economics, Econometrics and Finance · Mathematics · #Auditing, Earnings Management, Governance #Business #Combinatorics #Corporate Finance and Governance #Econometrics #Economics #Finance #Financial Markets and Investment Strategies #Financial economics #Industrial organization #Mathematics #Microeconomics #Monetary economics #Prime (order theory) #Product (mathematics) #Product differentiation #Product innovation #Prospectus #Uniqueness
paper · doi:10.1111/jofi.12853
published in The Journal of Finance 75(2), 779-823 (Wiley)
openalex publication_date 2019/10/22 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
ABSTRACT We study innovation and product differentiation using a uniqueness measure based on textual analysis of prospectuses. We find that small and start‐up families have higher start rates than larger families, and their products are more unique. Unique strategies attract more inflows in the first three years, and investors respond more to text‐based uniqueness than other measures such as holdings or returns uniqueness. For established funds, word uniqueness has weak negative power for explaining returns, so investors in competitive equilibrium do not sacrifice much performance to get specialized products. Uniqueness attenuates the flow‐performance relation, reducing the risk of investor outflows.