Personal Ability Or Schoolmate Network?The Reason Behind The Performances Of Fund Managers From Top Universities

Fund managers with privileged educational backgrounds have always been favored by investors and the industry,and previous studies have also proved that these managers do outperform ordinary ones.However,the reason why these managers can stand out remains unknown.In this paper,we try to investigate whether it is the personal abilities or the schoolmate networks that played a more important role in boosting the performance of these managers.We study the sample of 770 open-end funds in the Chinese market between 2013 and 2017,We apply the Kacperczyk model to calculate the timing and picking abilities of different fund managers and to investigate whether managers graduated from top universities do have better skills.We then apply the LSV model to investigate the herding behavior within the schoolmate networks of fund managers and the flow of private information within these groups of managers.Lastly we construct a panel data model to investigate whether it is because of the personal abilities or the schoolmate networks that managers from top universities outperform others.Our results suggest that fund managers graduated from top universities have significantly better timing skills than ordinary managers,but we find no proof for fund managers herding or sharing unusual amounts of private information within their schoolmate networks.Fund managers from top universities tend to have better performance because of their personal skills,especially timing skills,rather than their powerful schoolmate networks.