What a difference a (birth) month makes: The relative age effect and fund manager performance

Keywords

Confidence; Fund performance; Mutual funds; Relative age effect

Abstract

Many US states have a single cutoff date for school entry, meaning that some children are older than others when they begin kindergarten. We show that this variation in birth months is associated with differences in adult labor market outcomes in the mutual fund industry. Relatively older managers (i.e., those born just after the cutoff) make better stock selections, and their funds outperform their younger peers’ funds by 0.48% per annum. This difference is linked to increased confidence. Survey respondents judge relatively older managers as appearing more confident in photographs, and these managers display more confident behavior: making larger bets, window dressing their holdings less, and securing more fund flows conditional on performance.

Publication Date

4-1-2019

Publication Title

Journal of Financial Economics

Volume

132

Issue

1

Number of Pages

200-221

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1016/j.jfineco.2018.10.003

Socpus ID

85055896636 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/85055896636

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