Inherited Agglomeration Effects in Hedge Funds

46 Pages Posted: 16 Feb 2010 Last revised: 1 Oct 2012

See all articles by Rui J.P. de Figueiredo

Rui J.P. de Figueiredo

University of California, Berkeley - Business & Public Policy Group

Philipp Meyer-Doyle

INSEAD - Strategy

Evan Rawley

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: October 25, 2011

Abstract

This paper studies inherited agglomeration effects, how human capital that accrues to managers while working at a parent firm in an industry hub can be subsequently transferred to a spinoff. We test for inherited agglomeration effects in the context of the hedge fund industry and find that hedge fund managers who previously worked in New York and London outperform their peers who worked elsewhere previously by 10-14 basis points per month or about 1.5% per year. The results are driven by managers who worked in investment management positions previously, and are at least as large as traditional agglomeration effects that arise from being located in an industry hub contemporaneously. The evidence suggests that inherited agglomeration effects are an important, but as yet overlooked, factor influencing the performance of new firms.

Keywords: Agglomeration, entrepreneurial spawning

JEL Classification: M13

Suggested Citation

de Figueiredo, Rui José P. and Meyer-Doyle, Philipp and Rawley, Evan, Inherited Agglomeration Effects in Hedge Funds (October 25, 2011). Atlanta Competitive Advantage Conference 2010 Paper. Available at SSRN: https://ssrn.com/abstract=1553412 or http://dx.doi.org/10.2139/ssrn.1553412

Rui José P. De Figueiredo

University of California, Berkeley - Business & Public Policy Group ( email )

545 Student Services Building
Berkeley, CA 94720
United States
510-642-6452 (Phone)
510-643-1412 (Fax)

Philipp Meyer-Doyle

INSEAD - Strategy ( email )

1 Ayer Rajah Avenue
Singapore, 138676
Singapore

Evan Rawley (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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