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How University Endowments Respond to Financial Market Shocks: Evidence and Implications / Jeffrey Brown, Stephen G. Dimmock, Jun-Koo Kang, Scott Weisbenner.
- Format:
- Book
- Author/Creator:
- Brown, Jeffrey.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w15861.
- NBER working paper series no. w15861
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2010.
- Summary:
- Endowment payouts have become an increasingly important component of universities' revenues in recent decades. We test two leading theories of endowment payouts: (1) universities smooth endowment payouts, or (2) universities use endowments as self-insurance against financial shocks. In contrast to both theories, endowments actively reduce payouts relative to their stated payout policies following negative, but not positive, shocks. This asymmetric behavior is consistent with "endowment hoarding," especially among endowments with values close to the benchmark value at the start of the university president's tenure. We also document the effect of negative endowment shocks on university operations, including personnel cuts.
- Notes:
- Print version record
- April 2010.
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