Sibling Rivalry May Explain Risky Bets by Fund Managers, New Research Suggests
New research indicates a fund managerS birth order-specifically, whether they are an older sibling-can substantially influence their trading behavior, potentially leading to increased risk-taking. The study, slated for publication in Corporate Finance in 2025 (volume 95, issue c, s0929119925001208), suggests older siblings exhibit a greater propensity for competitive risk-taking in financial markets, a behavior researchers link to ingrained sibling rivalry dynamics.
The findings have implications for understanding the psychological factors driving investment decisions and could help explain variations in fund performance. the research, classified under JEL codes G11 (Portfolio Choice; Investment Decisions) and G23 (Non-bank Financial Institutions; Financial Instruments; Institutional investors), analyzed trading data to reveal that older siblings among fund managers were more likely to engage in trades with higher potential payoffs, but also greater downside risk. This behavior is theorized to stem from a lifelong pattern of striving to outperform siblings, translating into a competitive edge-seeking approach in their professional lives.
The study provides access and download statistics via Logec RePEc. Corrections to the material can be submitted referencing the RePEc handle: RePEc:eee:corfin:v:95:y:2025:i:c:s0929119925001208. Authors are encouraged to register with RePEc to link their profiles and confirm citations. Bibliographic references can be added through a dedicated form, and technical inquiries can be directed to Catherine Liu via the provider, Elsevier (http://www.elsevier.com/locate/jcorpfin).
