Finding Fortune: How Do Institutional Investors Pick Asset Managers?

• 成果类型: Article
• 署名作者: Brown, Gregory W.; Gredil, Oleg R.; Kantak, Preetesh
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; University of North Carolina School of Medicine; Tulane University; Indiana University System; IU Kelley School of Business; Indiana University Bloomington
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhac090
• 发表日期: 2023
• 页码: 3071
• 关键词: GOVERNANCE EVIDENCE; Hedge funds; INFORMATION; performance; DYNAMICS; size; RISK

摘要

We propose and test a framework of private information acquisition and decision timing for asset allocators hiring outside investment managers. Using unique data on due diligence interactions between an institutional allocator and 860 hedge fund managers, we find that the production of private information complements public information. The allocator strategically chooses how much proprietary information to collect, reducing due diligence time by 18 months and improving outcomes. Funds selected by the manager outperform those not selected by 9% over 20 months. The outperformance relates to the allocator learning about fund return-to-scale constraints and manager skill before other investors.