Nationalism, Subtle Bias, and Labor Outcomes: Evidence from Global Mutual Funds

54 Pages Posted: 14 Aug 2023 Last revised: 22 Aug 2023

See all articles by Richard B. Evans

Richard B. Evans

University of Virginia - Darden School of Business

Michael Young

University of Missouri at Columbia - Department of Finance

Date Written: November 15, 2022

Abstract

We examine the implications of subtle bias against ethnically diverse managers in a global sample of 13,000 mutual fund managers, representing 105 different nationalities, and working across 30 countries. Using a sample of fund managers working in multiple teams across multiple domiciles, we find that ethnically diverse managers rank 5%-9% lower in terms of category-month, and domicile-category-month performance rankings when working in a more nationalistic country. We extend our examination of bias and show that ethnically diverse managers are less likely to be promoted, and more likely to exit the industry. Relative to non-diverse managers, diverse managers are 12% less likely to be promoted. As with performance, this effect is larger in countries with higher levels of nationalism. We also find that prior wars fought between a managers’ ancestral origin and their working domicile is related to lower rates of promotion. Within diverse managers, senior managers face less bias, while diverse female managers face more. Building on our primary performance results, we also show that fund performance suffers as the genetic distance between members of the team increases. Using national holidays and the FIFA World Cup to ‘prime’ nationalistic feelings, we show that communication between diverse teams deteriorates when nationalistic feelings are increased. We argue this is the likely driver of diverse team underperform in our sample.

Keywords: Subtle Bias, Mutual Funds, Nationalism, Promotion, Genetic Distance

JEL Classification: D22, G11, G18, G23, J7

Suggested Citation

Evans, Richard B. and Young, Michael, Nationalism, Subtle Bias, and Labor Outcomes: Evidence from Global Mutual Funds (November 15, 2022). Available at SSRN: https://ssrn.com/abstract=4530251 or http://dx.doi.org/10.2139/ssrn.4530251

Richard B. Evans

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4030 (Phone)
434-243-7680 (Fax)

HOME PAGE: http://faculty.darden.virginia.edu/evansr/

Michael Young (Contact Author)

University of Missouri at Columbia - Department of Finance ( email )

Columbia, MO 65211
United States

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