How university endowments respond to financial market shocks : evidence and implications

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 relativ...

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Main Authors: Brown, Jeffrey R., Dimmock, Stephen G., Kang, Jun-Koo, Weisbenner, Scott J.
Other Authors: Nanyang Business School
Format: Article
Language:English
Published: 2014
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Online Access:https://hdl.handle.net/10356/105787
http://hdl.handle.net/10220/20933
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Institution: Nanyang Technological University
Language: English
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spelling sg-ntu-dr.10356-1057872023-05-19T06:44:41Z How university endowments respond to financial market shocks : evidence and implications Brown, Jeffrey R. Dimmock, Stephen G. Kang, Jun-Koo Weisbenner, Scott J. Nanyang Business School DRNTU::Business::Finance::Fixed income::Bonds 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. Published version 2014-09-19T07:41:38Z 2019-12-06T21:57:52Z 2014-09-19T07:41:38Z 2019-12-06T21:57:52Z 2014 2014 Journal Article Brown, J. R., Dimmock, S. G., Kang, J. K., & Weisbenner, S. J. (2014). How university endowments respond to financial market shocks : evidence and implications. American economic review, 104(3), 931-962. 0002-8282 https://hdl.handle.net/10356/105787 http://hdl.handle.net/10220/20933 10.1257/aer.104.3.931 en American economic review © 2014 American Economic Association. This paper was published in American Economic Review and is made available as an electronic reprint (preprint) with permission of American Economic Association. The paper can be found at the following official DOI: [http://dx.doi.org/10.1257/aer.104.3.931]. One print or electronic copy may be made for personal use only. Systematic or multiple reproduction, distribution to multiple locations via electronic or other means, duplication of any material in this paper for a fee or for commercial purposes, or modification of the content of the paper is prohibited and is subject to penalties under law. 33 p. application/pdf
institution Nanyang Technological University
building NTU Library
continent Asia
country Singapore
Singapore
content_provider NTU Library
collection DR-NTU
language English
topic DRNTU::Business::Finance::Fixed income::Bonds
spellingShingle DRNTU::Business::Finance::Fixed income::Bonds
Brown, Jeffrey R.
Dimmock, Stephen G.
Kang, Jun-Koo
Weisbenner, Scott J.
How university endowments respond to financial market shocks : evidence and implications
description 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.
author2 Nanyang Business School
author_facet Nanyang Business School
Brown, Jeffrey R.
Dimmock, Stephen G.
Kang, Jun-Koo
Weisbenner, Scott J.
format Article
author Brown, Jeffrey R.
Dimmock, Stephen G.
Kang, Jun-Koo
Weisbenner, Scott J.
author_sort Brown, Jeffrey R.
title How university endowments respond to financial market shocks : evidence and implications
title_short How university endowments respond to financial market shocks : evidence and implications
title_full How university endowments respond to financial market shocks : evidence and implications
title_fullStr How university endowments respond to financial market shocks : evidence and implications
title_full_unstemmed How university endowments respond to financial market shocks : evidence and implications
title_sort how university endowments respond to financial market shocks : evidence and implications
publishDate 2014
url https://hdl.handle.net/10356/105787
http://hdl.handle.net/10220/20933
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