SSRN-Of Tournaments and Temptations: An Analysis of Managerial Incentives in the Mutual Fund Industry by Keith Brown, W. Harlow, Laura Starks

  Paper Stats:
   Abstract Views: 1257
   Downloads: 0

Of Tournaments and Temptations: An Analysis of Managerial Incentives in the Mutual Fund Industry

KEITH C. BROWN
University of Texas at Austin - Department of Finance
W. VAN HARLOW
Fidelity Investments
LAURA T. STARKS
University of Texas at Austin - Department of Finance

J. OF FINANCE, Vol. 51 No. 1, March 1996

Abstract:
We test the hypothesis that when their compensation is linked to relative performance, managers of investment portfolios likely to end up as "losers" will manipulate fund risk differently than those managing portfolios likely to be "winners." An empirical investigation of the performance of 334 growth-oriented mutual funds during 1976 to 1991 demonstrates that mid-year losers tend to increase fund volatility in the latter part of an annual assessment period to a greater extent than mid-year winners. Further, we show that this effect became stronger as industry growth and investor awareness of fund performance increased over time.

JEL Classifications: G10

Accepted Paper Series

Contact Information for LAURA T. STARKS (Contact Author) Email address for LAURA T. STARKS University of Texas at Austin - Department of Finance Red McCombs School of Business Austin , TX 78712 United States 512-471-5899 (Phone) 512-471-5073 (Fax)
Contact Information for KEITH C. BROWN Email address for KEITH C. BROWN University of Texas at Austin - Department of Finance Red McCombs School of Business Austin , TX 78712 United States 512-471-6520 (Phone) 512-471-5073 (Fax)
Contact Information for W. VAN HARLOW Email address for W. VAN HARLOW Fidelity Investments 82 Devonshire Street Boston , MA 02109 United States 617-563-2673 (Phone) 617-476-9762 (Fax)

Email Abstract or URL

SSRN Resources

To search for other abstracts in the SSRN archival database, click here.

To order a membership to an SSRN Network or to subscribe to one or more of SSRN's journals, go to our online subscription request form.

To go to SSRN's main web site (www.ssrn.com), click here.