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

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Chuprinin, Oleg

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w22517.Publication details: Cambridge, Mass. National Bureau of Economic Research 2016.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: 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.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w22517 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w22514 The Opportunity Costs of Entrepreneurs in International Trade /	nber w22515 Do Hospital-Owned Skilled Nursing Facilities Provide Better Post-Acute Care Quality? /	nber w22516 Assessing Point Forecast Accuracy by Stochastic Error Distance /	nber w22517 Family Descent as a Signal of Managerial Quality: Evidence from Mutual Funds /	nber w22518 The Marginal Propensity to Consume Over the Business Cycle /	nber w22519 Marketplace Plan Payment Options for Dealing with High-Cost Enrollees /	nber w2252 The Insensitivity of Consumption to News About Income /	Next

August 2016.

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.