Are College Education and Job Experience Complements or Substitutes? Evidence from Hedge Fund Portfolio Performance

52 Pages Posted: 18 Aug 2015

See all articles by Byoung Uk Kang

Byoung Uk Kang

The Hong Kong Polytechnic University - School of Accounting and Finance

Jin-Mo Kim

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Oded Palmon

Rutgers Business School

Zhaodong Zhong

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Date Written: March 17, 2015

Abstract

We examine, for various educational characteristics of hedge fund managers, the performance profile of hedge fund portfolios along their managers’ professional experience path. We find that during the initial years following their graduation, hedge fund managers who majored in business or economics outperform other managers. However, in subsequent years, hedge fund managers who studied science or engineering improve their performance and eventually outperform all other managers. These results are consistent with the view that business education is a substitute for, while science education is a complement to, job experience in acquiring the skills that help hedge fund managers generate excess returns. Consistent with Chevalier and Ellison’s (1999b) findings for mutual fund managers, we find a positive and significant relation between the academic ability of hedge fund managers (as measured by the average SAT scores of the students in the school that the managers attended) and their fund performance. However, a significant positive relation does not exist between fund performance and other school characteristics such as tuition, school ranking, and student-faculty ratio.

Keywords: Education and Productivity, Education Area, Work Experience, Complementarity, Hedge Fund Performance

JEL Classification: I26, J24, G23, G11

Suggested Citation

Kang, Byoung Uk and Kim, Jin-Mo and Palmon, Oded and Zhong, Zhaodong, Are College Education and Job Experience Complements or Substitutes? Evidence from Hedge Fund Portfolio Performance (March 17, 2015). 28th Australasian Finance and Banking Conference. Available at SSRN: https://ssrn.com/abstract=2646324 or http://dx.doi.org/10.2139/ssrn.2646324

Byoung Uk Kang

The Hong Kong Polytechnic University - School of Accounting and Finance ( email )

School of Accounting and Finance
The Hong Kong Polytechnic University
Hung Hom, Kowloon
Hong Kong
852-2766-7085 (Phone)

HOME PAGE: http://www.af.polyu.edu.hk/people/detail/36

Jin-Mo Kim

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

Janice H. Levin Bldg., Room 121
94 Rockafeller Road
Piscataway, NJ 08854-8054
United States

Oded Palmon (Contact Author)

Rutgers Business School ( email )

Room 5123
100 Rockafeller Road
Piscataway, NJ 08854
United States
848-445-4209 (Phone)
848-445-3907 (Fax)

Zhaodong Zhong

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

Department of Finance, Rutgers Business School
100 Rockafeller Road
Piscataway, NJ 08854
United States

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