The researchers, Stephen Brown, Yan Lu, Sugata Ray , and Melvyn Teo, began with a hypothesis about a psychological trait called “sensation seeking.” As they write, the trait is “defined by the seeking of varied, novel, complex, and intense sensations and experiences, and the willingness to take physical, social, legal, and financial risks for the sake of such experience.” Major sensation seekers, in other words, are the sort of people who probably make for good Hollywood protagonists, and they are more likely to step outside the law. Among other correlates established by earlier research, people with the trait are less careful with spending and engage in risky driving. So when their disposable incomes start to swell, the researchers reasoned, they are more likely to stop by a Ferrari showroom than a Subaru lot.

The study’s authors reason that hedge-fund managers make for perfect subjects for observing the upsides and downsides of being a sensation seeker, since they work in a relatively unconstrained sector of the finance industry, where personal tendencies towards risk and crime are less likely to be reined in by regulation or norms, as well as more likely to show up in investment-performance records and mandatory disclosures of past violations. But the researchers theorize that the same would be true of other finance professionals who make investment decisions, though it may be less pronounced.

It’s important to clarify that investing is inherently risky, and that there is such a thing as good risk, versus bad risk. For instance, if one can afford to, it’s rational to bet on a 50-50 chance that pays out more than double.

But the researchers found that the sports-car-driving managers are more likely to take bad risks; their higher-risk strategies don’t produce greater rewards. Quite the opposite, Brown and co. write:

We find that hedge fund managers who own powerful sports cars take on more investment risk. Conversely, managers who own practical but unexciting cars take on less investment risk. The incremental risk taking by performance car buyers does not translate to higher returns … In addition, performance car owners are more likely to terminate their funds, engage in fraudulent behavior, load up on non-index stocks ... and succumb to overconfidence.

The data show that the returns from investments made under hedge-fund managers who drive sports cars are about 17 percent more volatile than returns from ones who don’t have sports cars. These people trade in big sums; these numbers mean millions.

An even more instructive finding comes from the data on the correlation between car type and violations reported to the Securities and Exchange Commission (SEC). According to disclosures that traders are required to file with the government, sports-car owners are 17.3 percent more likely to have committed an SEC violation than are other car owners. On the other extreme, minivan drivers are a full 44.6 percent likelier than the rest to have a clean record. To be glib, fraudsters like roadsters.