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Birds of a Feather – Do Hedge Fund Managers Flock Together?

Author

Listed:
  • Marc Gerritzen

    (Berenberg)

  • Jens Carsten Jackwerth

    (University of Konstanz - Department of Economics)

  • Alberto Plazzi

    (USI-Lugano; Ecole Polytechnique Fédérale de Lausanne - Swiss Finance Institute)

Abstract

Mandatory filings for UK hedge funds allow analysis of the effect of managerial employment networks on investment behavior. Employment in the same firm leads to significantly more similar investment behavior in terms of raw returns, abnormal performance (alpha), systematic risk (beta), and residual returns. Employment at the same firm at the same time strengthens the results significantly. The joint effect accounts for about a fifth of the difference in investing behavior. Results are robust to fund and manager level controls, as well as to endogeneity concerns.

Suggested Citation

  • Marc Gerritzen & Jens Carsten Jackwerth & Alberto Plazzi, 2016. "Birds of a Feather – Do Hedge Fund Managers Flock Together?," Swiss Finance Institute Research Paper Series 16-10, Swiss Finance Institute, revised Jul 2020.
    • Handle: RePEc:chf:rpseri:rp1610
    as

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    Citations

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    Cited by:

    1. Spilker, Harold D., 2022. "Hedge fund family ties," Journal of Banking & Finance, Elsevier, vol. 134(C).

    More about this item

    Keywords

    hedge funds; social ties; networks; abnormal performance;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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