Network centrality and delegated investment performance

Alberto G. Rossi, David Blake, Allan Timmermann, Ian Tonks and Russell Wermers ()

Journal of Financial Economics, 2018, vol. 128, issue 1, 183-206

Abstract: We show a positive relation between network centrality and risk-adjusted performance in a delegated investment management setting. More connected managers take more portfolio risk and receive higher investor flows, consistent with these managers improving their ability to exploit investment opportunities through their network connections. Greater network connections are shown to be particularly important in reducing the diseconomies of scale for large managers who are well connected. We also use the exogenous merger of two investment consultants, which creates a sudden change in the network connections of the managers they oversee, to provide evidence that a greater number of connections translates into better portfolio performance.

Keywords: Asset management; Networks; Investment performance; Flows; Manager skills (search for similar items in EconPapers)
JEL-codes: D85 G10 G24 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:128:y:2018:i:1:p:183-206

DOI: 10.1016/j.jfineco.2018.02.003

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