Foreign Talent and Hedge Funds

Jun Chen; Shenje Hshieh; Melvyn Teo; Feng Zhang

Foreign Talent and Hedge Funds

Jun Chen
, Shenje Hshieh
, Melvyn Teo^*
, Feng Zhang

^*Corresponding author for this work

Department of Economics and Finance

Research output: Conference Papers › RGC 33 - Other conference paper

Abstract

We examine the value of skilled foreign labor for hedge funds by leveraging on two natural experiments. We find that hedge funds that secure more H-1B visas in random lotteries deliver higher alphas, Sharpe ratios, and information ratios. Moreover, an unexpected reduction in the H-1B quota undermined the performance of hedge funds that were dependent on H-1B workers. The superior performance of funds with high H-1B allocations can be attributed to highly-educated STEM majors operating systematic strategies. Notwithstanding the valuable skills that foreign workers possess, racial and ethnic homophily induces some fund managers to eschew foreign labor.

Original language	English
Publication status	Presented - 25 Oct 2022
Event	2022 Financial Management Association (FMA) Annual Meeting - Hyatt Regency Hotel, Atlanta, United States Duration: 19 Oct 2022 → 22 Oct 2022 https://www.fma.org/atlanta https://www.fmaconferences.org/Atlanta2022/AtlantaProgram.htm#Virtual

Conference

Conference	2022 Financial Management Association (FMA) Annual Meeting
Place	United States
City	Atlanta
Period	19/10/22 → 22/10/22
Internet address	https://www.fma.org/atlanta https://www.fmaconferences.org/Atlanta2022/AtlantaProgram.htm#Virtual

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Research Unit(s) information for this publication is provided by the author(s) concerned.

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title = "Foreign Talent and Hedge Funds",

abstract = "We examine the value of skilled foreign labor for hedge funds by leveraging on two natural experiments. We find that hedge funds that secure more H-1B visas in random lotteries deliver higher alphas, Sharpe ratios, and information ratios. Moreover, an unexpected reduction in the H-1B quota undermined the performance of hedge funds that were dependent on H-1B workers. The superior performance of funds with high H-1B allocations can be attributed to highly-educated STEM majors operating systematic strategies. Notwithstanding the valuable skills that foreign workers possess, racial and ethnic homophily induces some fund managers to eschew foreign labor.",

author = "Jun Chen and Shenje Hshieh and Melvyn Teo and Feng Zhang",

note = "Research Unit(s) information for this publication is provided by the author(s) concerned.; 2022 Financial Management Association (FMA) Annual Meeting ; Conference date: 19-10-2022 Through 22-10-2022",

year = "2022",

month = oct,

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AU - Chen, Jun

AU - Hshieh, Shenje

AU - Teo, Melvyn

AU - Zhang, Feng

N1 - Research Unit(s) information for this publication is provided by the author(s) concerned.

PY - 2022/10/25

Y1 - 2022/10/25

N2 - We examine the value of skilled foreign labor for hedge funds by leveraging on two natural experiments. We find that hedge funds that secure more H-1B visas in random lotteries deliver higher alphas, Sharpe ratios, and information ratios. Moreover, an unexpected reduction in the H-1B quota undermined the performance of hedge funds that were dependent on H-1B workers. The superior performance of funds with high H-1B allocations can be attributed to highly-educated STEM majors operating systematic strategies. Notwithstanding the valuable skills that foreign workers possess, racial and ethnic homophily induces some fund managers to eschew foreign labor.

AB - We examine the value of skilled foreign labor for hedge funds by leveraging on two natural experiments. We find that hedge funds that secure more H-1B visas in random lotteries deliver higher alphas, Sharpe ratios, and information ratios. Moreover, an unexpected reduction in the H-1B quota undermined the performance of hedge funds that were dependent on H-1B workers. The superior performance of funds with high H-1B allocations can be attributed to highly-educated STEM majors operating systematic strategies. Notwithstanding the valuable skills that foreign workers possess, racial and ethnic homophily induces some fund managers to eschew foreign labor.

M3 - RGC 33 - Other conference paper

T2 - 2022 Financial Management Association (FMA) Annual Meeting

Y2 - 19 October 2022 through 22 October 2022

ER -

Foreign Talent and Hedge Funds

Abstract

Conference

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