How University Endowments Respond to Financial Market Shocks: Evidence and Implications

Jeffrey Brown, Stephen Dimmock, Jun-Koo Kang and Scott Weisbenner

American Economic Review, 2014, vol. 104, issue 3, 931-62

Abstract: Endowment payouts have become an increasingly important component of universities' revenues in recent decades. We study how universities respond to financial shocks to endowments and thus shed light on a number of existing models of endowment behavior. Endowments actively reduce payouts relative to their stated payout policies following negative, but not positive, shocks. This asymmetric behavior is consistent with "endowment hoarding," especially among endowments whose current value is close to the benchmark value at the start of the university president's tenure. We also document the effect of negative endowment shocks on university operations, such as personnel cuts.

JEL-codes: G35 I22 I23 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.3.931
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.104.3.931 (application/pdf)
http://www.aeaweb.org/aer/app/10403/20121051_app.pdf (application/pdf)
http://www.aeaweb.org/aer/data/10403/20121051_data.zip (application/zip)
http://www.aeaweb.org/aer/ds/10403/20121051_ds.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: How University Endowments Respond to Financial Market Shocks: Evidence and Implications (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:104:y:2014:i:3:p:931-62

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().