Secrets of the Academy
The Drivers of University Endowment Success
Bibliographic Data
| ID | 5024604 |
|---|---|
| Authors | Josh Lerner (0000-0003-3822-2162, Harvard Business School, Boston, Massachusetts; National Bureau of Economic Research, Cambridge, Massachusetts.), Antoinette Schoar (Massachusetts Institute of Technology, Cambridge, Massachusetts; National Bureau of Economic Research, Cambridge, Massachusetts.), Jialan Wang (Massachusetts Institute of Technology) |
| Year | 2008 |
| Volume | 22 |
| Issue | 3 |
| Pages | 207-222 |
| Publication date | 2008-07-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Journal of Economic Perspectives (JOURNAL) |
| Journal identifiers | ISSN: 0895-3309 • E-ISSN: 1944-7965 |
| Publisher | American Economic Association (PUBLISHER • US) |
| DOI | 10.1257/jep.22.3.207 |
| OpenAlex | W3122396180 |
| Language | EN |
| Citations received | 9 |
| References cited | 3 |
University endowments have received much attention recently for their superior investment returns compared with other institutional investors. This study documents trends in college and university endowment returns and investments in the United States between 1992 and 2005 using data on over a thousand schools. Such endowments have generally performed well over this time period, with a median growth rate of 7.4 percent per year and median return of 6.9 percent. This sector has been dominated both in size and performance by the endowments of elite universities such as the Ivy League schools. The top 20 endowments grew more than 9 percent annually on a real basis between 1992 and 2005. As of 2007, the two largest endowments, belonging to Harvard and Yale, have grown to $35 billion and $22 billion in size, respectively. Much of the growth in endowment size has been driven by investment performance. As we will show in the paper, the top endowments posted impressive returns in 2005, averaging a net real return of 12.3 percent, compared to 4.4 percent posted by the S&P 500 index in the same year. We investigate the underlying drivers of these high returns and show that performance is related to the size of endowment, the quality of the student body, and the use of alternative investments. We caution ordinary investors that mimicking the strategies of the top endowments would not necessarily result in similar returns
Demographic economics · Economics · Elite · Endowment · Labour economics · League · Political science · Rate of return · Corporate Finance and Governance · Private Equity and Venture Capital · State Capitalism and Financial Governance · Finance
Globally competitive and locally Contributed universities
Examining Wyoming’s Endowment Challenge Program
Financial disparities among public universities
Knowledge Spillovers from Research Universities
Background Risk and University Endowment Funds
Affiliated Nonprofit Organizations
Institutional Conflict of Interest
The Impact of Endowment Shocks on Payouts
Asset manager capitalism
| Unique citing works | 9 |
|---|---|
| Citations per year | 0.64 |
| Citation span | 2012 - 2026 (15) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 9 |