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

This paper previously circulated under the title "Why I Lost My Secretary: The Effect of Endowment Shocks on University Operations." We are grateful to seminar participants at Aalto University, Chinese University of Hong Kong, City University of Hong Kong, DePaul University, Hebrew University, ISCTE Business School Conference, Korea University, Maastricht University, Miami University, MSU Federal Credit Union Conference on Financial Institutions and Investments, NBER Summer Institute, Stockholm School of Economics, Tel Aviv University, University of Hong Kong, University of Illinois, University of Iowa, the Vienna Endowment Workshop, and West Virginia University and Warren Bailey, Bo Becker, Dan Bergstresser, Lauren Cohen, Elroy Dimson, Ron Ehrenberg, Vidhan Goyal, Harrison Hong, Caroline Hoxby, Leigh Linden, Jim Poterba, Dorothy Robinson, Rik Sen, Michael Smith, Laura Starks, David Swensen, Jay Wang, Mike Weisbach, and Josef Zechner for useful comments and suggestions. We also thank Matt Hamill and Ken Redd of NACUBO and John Griswold of the Commonfund for assistance with data and helpful discussions. Andrew Edgar and Jia Xing provided excellent research assistance. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.

• December 5, 2011