Competition Among University Endowments

William Goetzmann and Sharon Oster

No 18173, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The asset allocation of university endowments has recently shifted dramatically towards alternative investments. In this paper we examine the role played by strategic competition in motivating this shift. Using a metric capturing competition for undergraduate applications, we test whether endowment performance relative to a school's nearest competitor is associated with the likelihood of changing investment policy, and conditionally, whether the nature of that change is consistent with the goal of "catching up" to its closest rival. Conditional on indicating a policy change, we find that endowments appear to use marketable alternatives - i.e. hedge funds - to catch up to competitors. More generally, we find evidence that endowments with below median holdings of alternative investments tend to shift policies in that direction. Besides herding behavior we also find trend-chasing behavior. Endowments with recent positive experience with various alternative asset classes tend to increase exposure to them. We consider the long-run implications of this competitive and trending behavior for the ability of endowments to deliver intergenerational equity.

JEL-codes: D4 G2 (search for similar items in EconPapers)
Date: 2012-06
New Economics Papers: this item is included in nep-ict
Note: AP
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published as Competition among University Endowments , William N. Goetzmann, Sharon Oster. in How the Financial Crisis and Great Recession Affected Higher Education , Brown and Hoxby. 2015

Downloads: (external link)
http://www.nber.org/papers/w18173.pdf (application/pdf)

Related works:
Chapter: Competition among University Endowments (2013)
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:nbr:nberwo:18173

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w18173

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().