Till Death (Or Divorce) Do us Part: Early-Life Family Disruption and Fund Manager Behavior

67 Pages Posted: 9 Apr 2019 Last revised: 18 Jun 2019

See all articles by André Betzer

André Betzer

BUW- Schumpeter School of Business and Economics

Peter Limbach

University of Cologne and Centre for Financial Research (CFR)

P. Raghavendra Rau

University of Cambridge

Henrik Schürmann

BUW - Schumpeter School of Business and Economics

Date Written: March 16, 2019

Abstract

We show that fund managers who experienced early-life family disruption (death or divorce of a parent) are more risk-averse, i.e., they take lower idiosyncratic, systematic, and downside risk. This result is most pronounced for stronger treatments, e.g., when disruption occurred during managers’ formative years or in cases of parental deaths when the bereaved parent had no new partner. We also find that treated managers are more likely to sell their holdings in reaction to risk increasing (firm) events, hold fewer lottery-like stocks, make smaller tracking errors, and bet less on factors during recessions, but do not perform worse than their untreated cohorts. Our evidence indicates that familial background affects economic decisions later in life even for finance professionals.

Keywords: Family Disruption, Formative Experiences, Portfolio Activities, Risk-Taking

JEL Classification: G11, G23, G41

Suggested Citation

Betzer, André and Limbach, Peter and Rau, P. Raghavendra and Schürmann, Henrik, Till Death (Or Divorce) Do us Part: Early-Life Family Disruption and Fund Manager Behavior (March 16, 2019). Available at SSRN: https://ssrn.com/abstract=3353686 or http://dx.doi.org/10.2139/ssrn.3353686

André Betzer (Contact Author)

BUW- Schumpeter School of Business and Economics ( email )

Gaußstraße 20
Wuppertal
Germany

HOME PAGE: http://finance.uni-wuppertal.de/index.php?id=1153

Peter Limbach

University of Cologne and Centre for Financial Research (CFR) ( email )

Albertus-Magnus-Platz
Köln, 50923
Germany

HOME PAGE: http://www.finance.uni-koeln.de

P. Raghavendra Rau

University of Cambridge ( email )

Cambridge Judge Business School
Trumpington Street
Cambridge, Cambridgeshire CB21AG
United Kingdom
3103626793 (Phone)

HOME PAGE: http://www.raghurau.com/

Henrik Schürmann

BUW - Schumpeter School of Business and Economics ( email )

Gaußstraße 20
Wuppertal, 42119
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
258
Abstract Views
1,213
rank
117,666
PlumX Metrics