Too Much Testosterone Hurt Returns

nvestment management has traditionally been a male-dominated industry, and is often noted for its machismo and aggressive competitiveness. So how does testosterone levels shape trading behaviour and affect investment performance? While some research have shown that high-frequency traders with high testosterone levels deliver better results, the same may not be true in the case of hedge fund managers. Professor Melvyn Teo, who is the Lee Kong Chian Professor of Finance and Deputy Dean for Faculty & Research at the SMU Lee Kong Chian School of Business, specialises in hedge funds research. In this podcast, he shares his recent study where the facial width-to-height ratios of over 3,000 hedge fund managers were used as an indicator of their testosterone levels, and analysed against their fund performance. It was found that the high-testosterone hedge fund managers significantly underperformed their low-testosterone peers