Where do Hedge Fund Managers Come from? Past Employment Experience and Managerial Performance

45 Pages Posted: 17 Jun 2011 Last revised: 23 Jan 2012

See all articles by Nicolas A. Papageorgiou

Nicolas A. Papageorgiou

HEC Montreal - Department of Finance

Jerry T. Parwada

UNSW Australia Business School, School of Banking and Finance; UNSW Business School; Financial Research Network (FIRN)

Eric K. M. Tan

University of Queensland - Business School

Date Written: May 4, 2011

Abstract

Hedge funds are secretive products whose quality is difficult to ascertain in advance of investment. We examine two views of past work experience as predictors of hedge fund manager pedigree. In one, sector specific (hedge fund) work experience is positively related to performance. In the other, related industry (mutual funds, prime brokerages, custodian firms and securities brokerages) experience correlates with superior performance. Overall, aspects of specific and generally related industry experience appear important in signaling hedge fund quality. Funds whose management team possesses past hedge fund experience report superior performance. However, diversifying across experience types in a fund has no impact on returns. Hedge fund manager teams with prime brokerage and custodian experience along both proportional and diversity dimensions experience higher survival probabilities.

Keywords: Hedge funds, managerial experience, performance, survival

JEL Classification: G20, G23

Suggested Citation

Papageorgiou, Nicolas A. and Parwada, Jerry T. and Tan, Eric K. M., Where do Hedge Fund Managers Come from? Past Employment Experience and Managerial Performance (May 4, 2011). UNSW Australian School of Business Research Paper No. 2011 BFIN 06; 24th Australasian Finance and Banking Conference 2011 Paper. Available at SSRN: https://ssrn.com/abstract=1863643 or http://dx.doi.org/10.2139/ssrn.1863643

Nicolas A. Papageorgiou

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Jerry T. Parwada (Contact Author)

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Financial Research Network (FIRN)

UNSW
Sydney, NSW 2052
Australia

HOME PAGE: http://www.firn.org.au

Eric K. M. Tan

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

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