Foreign Talent and Hedge Funds
Publication Date
2-9-2022
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.
Document Type
Article
Keywords
Foreign labor, H-1B, Visa, Systematic, Quantitative, Race, Ethnicity, Diversity, Homophily, STEM, Education
Disciplines
Finance
DOI
10.2139/ssrn.4025639
Source
SMU Cox: Finance (Topic)
Language
English
