Choosing Investment Managers

Amit Goyal, Sunil Wahal, and M. Deniz Yavuz

♦ Investment managers connected to plan sponsors are more likely to be hired than not-connected managers. The magnitude of the selection effect is comparable to that of prior performance. Ex post, connections do not result in higher post-hiring returns. Relationships are thus conducive to asset gathering by investment managers but do not generate commensurate pecuniary benefits for plan sponsors.

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