Family Descent as a Signal of Managerial Quality: Evidence from Mutual Funds / Oleg Chuprinin, Denis Sosyura.

Format:

Book

Author/Creator:

Chuprinin, Oleg.

Contributor:

National Bureau of Economic Research.

Sosyura, Denis.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22517.

NBER working paper series no. w22517

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Family Descent as a Signal of Managerial Quality

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

We study the relation between mutual fund managers' family backgrounds and their professional performance. Using hand-collected data from individual Census records on the wealth and income of managers' parents, we find that managers from poor families deliver higher alphas than managers from rich families. This result is robust to alternative measures of fund performance, such as benchmark-adjusted return and value extracted from capital markets. We argue that managers born poor face higher entry barriers into asset management, and only the most skilled succeed. Consistent with this view, managers born rich are more likely to be promoted, while those born poor are promoted only if they outperform. Overall, we establish the first link between family descent of investment professionals and their ability to create value.

Notes:

Print version record

August 2016.