Special Topics: Finance and Race
Saturday, Jan. 7, 2023 2:30 PM - 4:30 PM (CST)
- Chair: Rohan Williamson, Georgetown University
Back to the Roots: Ancestral Origin and Mutual Fund Manager Portfolio Choice
AbstractWe exploit variation in the ancestries of U.S. equity mutual fund managers to show that ancestry affects portfolio decisions. Controlling for fund firm location, we find that funds overweight stocks from their managers' ancestral home countries in their non-U.S. portfolio by 132 bps or 20.34% compared with their peers. Similarly, funds overweight industries that are comparatively large in their manager's ancestral home countries. Stocks linked to managers' ancestry do not outperform stocks in the same countries and industries but held by managers of other ancestries. This supports the notion that ancestry-linked investments are not informed but due to familiarity.
The Impact of Minority Representation at Mortgage Lenders
AbstractWe study links between the labor market for loan officers and access to mortgage credit. Using novel data matching the (near) universe of mortgage applications to loan officers, we find that minorities are significantly underrepresented among loan officers. Minority borrowers are less likely to complete mortgage applications, have completed applications approved, and to ultimately take-up a loan. These disparities are significantly reduced when minority borrowers work with minority loan officers. Minority borrowers working with minority loan officers also have lower default rates. Our results suggest that minority underrepresentation among loan officers has adverse effects on minority borrowers’ access to credit.
The True Colors of Money: Racial Diversity and Asset Management
AbstractWe study the role of race and ethnicity in the investment decisions of mutual fund managers and investors. Funds managed by white-dominant teams allocate larger portfolio weights to firms led by white CEOs compared to funds managed by minority-dominant teams. Never- theless, white-dominant fund management teams do not deliver superior performance on held firms led by white CEOs, suggesting no race-related informational advantage. Considering flow-performance sensitivity, funds managed by minority-dominant teams are equally penal- ized for poor performance but not rewarded as much for superior performance compared to white-dominant funds. Our results uncover differential treatment of minority-led funds and firms by investors.
Einaudi Institute for Economics and Finance
University of Miami
- G0 - General