Do Alpha Males Deliver Alpha? Facial Width-to-Height Ratio and Hedge Funds

Journal of Financial and Quantitative Analysis, forthcoming

66 Pages Posted: 18 Jan 2018 Last revised: 15 Dec 2020

See all articles by Yan Lu

Yan Lu

University of Central Florida - College of Business Administration

Melvyn Teo

Singapore Management University - Lee Kong Chian School of Business

Date Written: January 12, 2018

Abstract

An abundance of evidence relates facial width-to-height ratio (fWHR) to masculine behaviors in males. We show that hedge funds operated by high-fWHR managers underperform those operated by low-fWHR managers, bear greater downside risk, are more susceptible to fire sales, and fail more often. High-fWHR managers compensate for their underperformance by marketing their funds more aggressively, thereby garnering higher flows and fee revenues. By exploiting major personal events that shape testosterone, namely marriage and fatherhood, we trace the biological mechanism underlying the relation between fWHR and investment performance to circulating testosterone. Our findings are robust and extend to equity mutual funds.

Keywords: hedge funds, alpha, facial width-to-height, testosterone, downside risk, fire sales, marriage, fatherhood, marketing intensity

JEL Classification: G02, G23

Suggested Citation

Lu, Yan and Teo, Melvyn, Do Alpha Males Deliver Alpha? Facial Width-to-Height Ratio and Hedge Funds (January 12, 2018). Journal of Financial and Quantitative Analysis, forthcoming, Available at SSRN: https://ssrn.com/abstract=3100645 or http://dx.doi.org/10.2139/ssrn.3100645

Yan Lu

University of Central Florida - College of Business Administration ( email )

PO Box 161400
Orlando, FL 32816
United States

Melvyn Teo (Contact Author)

Singapore Management University - Lee Kong Chian School of Business ( email )

50 Stamford Road
Singapore, 178899
Singapore
+65 6828 0735 (Phone)
+65 6822 0777 (Fax)

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