Publication Type
Conference Paper
Publication Date
3-2017
Abstract
Using a novel dataset of hedge fund manager automobile purchases, we show that, motivated by sensation seeking, hedge fund managers often take risk for personal and non-pecuniary reasons. In line with the sensation seeking view, managers who own powerful sports cars take on more investment risk but do not deliver higher returns, resulting in lower Sharpe ratios. Moreover, funds managed by performance car owners exhibit higher operational risk and are more likely to fail. Performance car owners demonstrate other attributes associated with sensation seeking, such as a preference for lottery-like stocks, unconventional strategies, and active trading.
Keywords
Sensation seeking, Hedge funds, Risk, Operational risk
Discipline
Finance and Financial Management | Portfolio and Security Analysis
Research Areas
Finance
Publication
Mid-Atlantic Research Conference in Finance 12th MARC 2017, March 17
First Page
1
Last Page
57
City or Country
Wayne, PA
Citation
BROWN, Stephen; LU, Yan; RAY, Sugata; and TEO, Melvyn.
Sensation-seeking hedge funds. (2017). Mid-Atlantic Research Conference in Finance 12th MARC 2017, March 17. 1-57.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5253
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.