Measuring Managerial Skill in the Mutual Fund Industry

39 Pages Posted: 22 Jun 2012

See all articles by Jonathan Berk

Jonathan Berk

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Jules H. van Binsbergen

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2012

Abstract

Using the dollar-value a mutual fund manager adds as the measure of skill, we find that not only does skill exist (the average mutual fund manager adds about $2 million per year), but this skill is persistent, as far out as 10 years. We further document that investors recognize this skill and reward it by investing more capital with skilled managers. Higher skilled managers are paid more and there is a strong positive correlation between current managerial compensation and future performance.

Suggested Citation

Berk, Jonathan B. and van Binsbergen, Jules H., Measuring Managerial Skill in the Mutual Fund Industry (June 2012). NBER Working Paper No. w18184. Available at SSRN: https://ssrn.com/abstract=2089256

Jonathan B. Berk (Contact Author)

Stanford Graduate School of Business ( email )

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National Bureau of Economic Research (NBER)

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Jules H. Van Binsbergen

University of Pennsylvania - The Wharton School ( email )

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Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/jules_vanbinsbergen

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