Returns to Scale from Labor Specialization: Evidence from Global Asset Management

67 Pages Posted: 2 Aug 2015 Last revised: 11 May 2021

See all articles by Mancy Luo

Mancy Luo

Erasmus University

Alberto Manconi

Bocconi University - Department of Finance; Centre for Economic Policy Research (CEPR)

David Schumacher

McGill University

Date Written: May 11, 2021

Abstract

We study economies of scale in asset management firms that stem from the improved ability to assign fund managers to specialized tasks in larger firms. Exploiting discrete changes in firm size after asset management mergers, we find that managers are assigned more specialized tasks in larger firms. This leads to improved fund performance and incremental value creation of $54 million of value added per deal per year on average. The effects are concentrated in firms that experience the largest increase in size. Our results provide direct evidence on the role of firms in the assignment of tasks to fund managers.

Keywords: Economies of Scale, Labor Specialization, Human Capital Productivity, Mergers & Acquisitions, Asset Management

JEL Classification: G23, J24, G34

Suggested Citation

Luo, Mancy and Manconi, Alberto and Schumacher, David, Returns to Scale from Labor Specialization: Evidence from Global Asset Management (May 11, 2021). Proceedings of Paris December 2019 Finance Meeting EUROFIDAI - ESSEC, Available at SSRN: https://ssrn.com/abstract=2638658 or http://dx.doi.org/10.2139/ssrn.2638658

Mancy Luo

Erasmus University ( email )

Burgemeester Oudlaan 50,
Mandeville Building, Room T08-47,
Rotterdam, 3062PA
Netherlands

HOME PAGE: http://sites.google.com/site/mancyluofinance/

Alberto Manconi

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://mypage.unibocconi.eu/albertomanconi/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

David Schumacher (Contact Author)

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada
5143984778 (Phone)

HOME PAGE: http://www.davidschumacher.info

Do you want regular updates from SSRN on Twitter?

Paper statistics

Downloads
468
Abstract Views
2,825
rank
84,722
PlumX Metrics