Returns to Scale from Labor Specialization: Evidence from Asset Management Mergers

Mancy Luo; Alberto Manconi; David  Schumacher

doi:10.1093/rcfs/cfad024

Returns to Scale from Labor Specialization: Evidence from Asset Management Mergers

Mancy Luo, Alberto Manconi, David Schumacher^*

^*Corresponding author for this work

Department of Finance

Research output: Contribution to journal › Article › Academic › peer-review

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Abstract

We study human capital synergies in asset management mergers that stem from the improved ability to assign fund managers to more specialized tasks in larger firms. More specialized task assignment allows rotated managers to focus on their investment expertise and leads to incremental $54 million of value added per deal per year on average. The effects are concentrated in mergers that lead to a large increase in firm size and in funds whose management appears less specialized prior to the merger. Our results provide direct evidence on the role of firms in the assignment of tasks to fund managers.

Original language	English
Article number	cfad024
Pages (from-to)	384-427
Number of pages	44
Journal	Review of Corporate Finance Studies
Volume	13
Issue number	2
Early online date	18 Oct 2023
DOIs	https://doi.org/10.1093/rcfs/cfad024
Publication status	Published - 1 May 2024

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The Author(s) 2023. Published by Oxford University Press on behalf of The Society for Financial Studies.

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abstract = "We study human capital synergies in asset management mergers that stem from the improved ability to assign fund managers to more specialized tasks in larger firms. More specialized task assignment allows rotated managers to focus on their investment expertise and leads to incremental $54 million of value added per deal per year on average. The effects are concentrated in mergers that lead to a large increase in firm size and in funds whose management appears less specialized prior to the merger. Our results provide direct evidence on the role of firms in the assignment of tasks to fund managers.",

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AB - We study human capital synergies in asset management mergers that stem from the improved ability to assign fund managers to more specialized tasks in larger firms. More specialized task assignment allows rotated managers to focus on their investment expertise and leads to incremental $54 million of value added per deal per year on average. The effects are concentrated in mergers that lead to a large increase in firm size and in funds whose management appears less specialized prior to the merger. Our results provide direct evidence on the role of firms in the assignment of tasks to fund managers.

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Returns to Scale from Labor Specialization: Evidence from Asset Management Mergers

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