Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 2 of 2
Full-Text Articles in Business
Do Alpha Males Deliver Alpha? Facial Width-To-Height Ratio And Hedge Funds, Yan Lu, Melvyn Teo
Do Alpha Males Deliver Alpha? Facial Width-To-Height Ratio And Hedge Funds, Yan Lu, Melvyn Teo
Research Collection Lee Kong Chian School Of Business
An abundance of evidence relates facial width-to-height ratio (fWHR) to masculine behaviors in males. We show that hedge funds operated by high-fWHR managers underperform those operated by low-fWHR managers, bear greater downside risk, are more susceptible to fire sales, and fail more often. High-fWHR managers compensate for their underperformance by marketing their funds more aggressively, thereby garnering higher flows and fee revenues. By exploiting major personal events that shape testosterone, namely marriage and fatherhood, we trace the biological mechanism underlying the relation between fWHR and investment performance to circulating testosterone. Our findings are robust and extend to equity mutual funds.
Do Alpha Males Deliver Alpha? Facial Structure And Hedge Funds, Yan Lu, Melvyn Teo
Do Alpha Males Deliver Alpha? Facial Structure And Hedge Funds, Yan Lu, Melvyn Teo
Research Collection Lee Kong Chian School Of Business
Facial structure as encapsulated by facial width-to-height ratio (fWHR) maps onto masculine behaviors in males and may positively relate to testosterone. We find that high-fWHR hedge fund managers underperform low-fWHR hedge fund managers by 5.83% per year after adjusting for risk. Moreover, funds operated by high-fWHR managers exhibit higher operational risk, suffer from a greater asset-liability mismatch, and are more likely to fail. We trace the underperformance to high-fWHR managers’ preference for lottery-like stocks and reluctance to sell loser stocks. The results are robust to adjustments for sample selection, marital status, sensation seeking, and manager race, and suggest that investors …