Topic: Luck or Skill? Evidence from Bereaved Fund Managers
Speaker: Tao Shu, Associate Professor of Finance, Terry College of Business, University of Georgia
Date: May 8th (Fri.)
Location: Building 4, Room 101
This paper examines the effects of filial bereavement on mutual fund managers. We find that mutual funds experience a decline in fund return of 3 percentage points around the parental deaths of their managers. This underperformance persists for six to twelve months following the event, consistent with longer-term depressive impact of parental death on fund managers. We also observe these bereaved funds becoming less aggressive as they reduce tracking errors of fund returns and shift their holdings to larger cap stocks. Our findings are inconsistent with the hypothesis that mutual fund performance is largely driven by random noise; instead, they indicate that mutual managers can use their skill to create value but fund performance can be influenced negatively by disruptions in the managers’ personal lives.
About the speaker:
Tao Shu is Associate Professor of Finance at Terry College of Business in University of Georgia, and also Visiting Associate Professor of Finance at HKUST Business School. Professor Shu received a M.S. in Statistics and Ph.D. in Finance from University of Texas at Austin. His research interests focuses on financial market efficiency, institutional and individual investors, corporate investments, mergers and acquisitions, and behavioral finance. His papers have appeared in Journal of Finance, Review of Financial Studies, and Management Science and other leading finance journals.