Family Descent as a Signal of Managerial Quality: Evidence from Mutual Funds
Review of Financial Studies, Forthcoming
72 Pages Posted: 22 Feb 2016 Last revised: 23 Feb 2018
Date Written: December 20, 2017
Using data from individual Census records on the wealth of managers’ parents, we find that mutual fund managers from poor families outperform managers from rich families. We argue that managers born poor face higher entry barriers into asset management. Consistent with this view, managers born poor are promoted only if they outperform while those born rich are more likely to be promoted for reasons unrelated to performance. Overall, we establish a first link between fund managers’ family descent and their ability to create value.
Keywords: mutual fund managers, family background, wealth
JEL Classification: D14, G11, G23
Suggested Citation: Suggested Citation