How University Endowments Respond to Financial Market Shocks: Evidence and Implications

  title={How University Endowments Respond to Financial Market Shocks: Evidence and Implications},
  author={J. Brown and Stephen G. Dimmock and Jun-Koo Kang and Scott J. Weisbenner},
  journal={Labor: Supply & Demand eJournal},
  • J. Brown, Stephen G. Dimmock, +1 author Scott J. Weisbenner
  • Published 2010
  • Economics
  • Labor: Supply & Demand eJournal
  • Endowment payouts have become an increasingly important component of universities’ revenues in recent decades. We test two leading theories of endowment payouts: (1) universities smooth endowment payouts, or (2) universities use endowments as self-insurance against financial shocks. In contrast to both theories, endowments actively reduce payouts relative to their stated payout policies following negative, but not positive, shocks. This asymmetric behavior is consistent with “endowment hoarding… CONTINUE READING
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