Facial Structure and Delegated Portfolio Management
58 Pages Posted: 18 Jan 2018 Last revised: 20 Jan 2020
Date Written: January 12, 2018
Facial structure as encapsulated by facial width-to-height ratio (fWHR) maps onto masculine behaviors in males and may positively relate to testosterone. We find that hedge funds operated by high-fWHR managers underperform those operated by low-fWHR managers after adjusting for risk. Moreover, hedge funds with high-fWHR managers exhibit greater operational and downside risk, are more susceptible to fire sales, prefer lottery-like stocks, and fail more often. Nonetheless, by marketing their funds more intensively, high-fWHR managers garner higher inflows and harvest greater fee revenues. The negative relation between fWHR and investment performance is robust and also manifests in equity mutual funds.
Keywords: hedge funds, alpha, facial width-to-height, testosterone, marketing intensity
JEL Classification: G02, G23
Suggested Citation: Suggested Citation