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Choosing Investment Managers

Published online by Cambridge University Press:  18 September 2023

Amit Goyal Open the ORCID record for Amit Goyal [Opens in a new window] ,
Sunil Wahal  and
M. D. Yavuz
Amit Goyal*
Affiliation:
University of Lausanne Swiss Finance Institute
Sunil Wahal
Affiliation:
Arizona State University W. P. Carey School of Business [email protected]
M. D. Yavuz
Affiliation:
Purdue University Krannert Graduate School of Management [email protected]
*
[email protected] (corresponding author)
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Abstract

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Investment managers connected to plans sponsors are more likely to be hired than not-connected managers. The magnitude of the selection effect is comparable to that of prior performance. Ex post, connections do not result in higher post-hiring returns. Relationships are thus conducive to asset gathering by investment managers but do not generate commensurate pecuniary benefits for plan sponsors.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , First View , pp. 1 - 33
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

We thank Hendrik Bessembinder, Mara Faccio, Chris Hrdlicka, Alberto Rossi, Denis Sosyura, Michael Woeppel, Scott Yonker (the referee), and seminar participants at George Washington University, IDC Herzliya, Imperial College, Indian School of Business Hyderabad, Purdue University, University of Amsterdam, University of Miami, University of Missouri, European Pensions and Investments 2021 Summit, Inquire Europe 2022 Seminar, Notre Dame Investment Management Conference, Q Group 2021 Spring Seminar, and Western Finance Association 2021 meeting for helpful comments. We are grateful to Lili Ge for research assistance. We thank the Center for Responsible Investing at ASU for financial support. We gratefully acknowledge research funding from INQUIRE Europe. Sunil Wahal is a consultant to Avantis Investors. Avantis did not provide data or funding for this research.

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