Publication in Socio-Economic Review is available open access here: https://academic.oup.com/ser/advance-article/doi/10.1093/ser/mwaf001/8002550
Summary: We show that universities are social organizations parallel to the economy that socially embed financiers, connecting them to other elites despite growing organizational complexity and fragmentation in finance.
Data
- University Board Member DataHub Data (original)
- Forbes 400 (anonymized in accordance with proprietary data requirements).
- Prequin Private Equity Returns (not provided in this repository because of proprietary restricted access).
- IPEDS Admissions, financial aid, revenue, endowment assets and enrollment by race
- NACUBO endowment assets
- IPEDS Institutional Characteristics
Abstract We develop a theory of elite embeddedness in which social organizations parallel to the economy can provide advantages via private information and reciprocity from other elites. The growing representation of private equity and hedge fund managers on university boards of trustees is analyzed to show how this increasingly wealthy sub-group of financiers gained elite social ties despite the decline of bank-based interlocks between corporate boards. We find evidence that financiers secured trustee positions both because of their high rates of elite degree holding and their attraction to trustee appointments at the most selective schools. We also find that private equity firms attained higher investment returns when their general partners held more trustee positions. The results suggest that benefits accrue to elite intermediaries from social closure in parallel social organizations such as universities.
Appendix with supplementary analyses and methods information is available here.