Date of Award

Summer 8-3-2013

Degree Type


Degree Name

Doctor of Philosophy (PhD)



First Advisor

Vikas Agarwal

Second Advisor

Lixin Huang

Third Advisor

Jayant Kale

Fourth Advisor

Vikram Nanda


I use a unique dataset of 1,808 mutual fund manager replacements to study the determinants and the subsequent impact of the choice between hiring the successor from within (internal hire) and outside (external hire) the fund family. I find that fund families prefer to replace their top performers with internal hires and bottom performers with external hires. External hires demonstrate superior ability to turn around bottom performing funds, but exhibit inferior ability to maintain the record of top performing funds. I find no cross-sectional difference in post-replacement performance between internal and external successors, indicating fund families, in general, make their replacement decisions optimally. I do, however, find that funds that deviate from the optimal decision have subsequent sub-par performance. Overall, the evidence suggests that portfolio managers play a pivotal role in determining mutual fund performance.