Bonus Payments and Fund Managers' Behaviour: Trans-Atlantic Evidence
University of Vienna - Faculty of Business, Economics, and Statistics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Vienna Graduate School of Finance (VGSF)
University of Hannover
German Institute for Economic Research (DIW Berlin); Humboldt University of Berlin - Faculty of Economics
CEPR Discussion Paper No. DP7118
This questionnaire survey of fund managers in the United States, Germany and Switzerland documents a distinctly positive influence of bonus payments on investment behaviour on both sides of the Atlantic. Higher bonus payments are significantly related to higher working effort but not to risk taking. They also seem to induce fund managers to rely more on fundamental information. Findings within regions are confirmed by Trans-Atlantic evidence as US fund managers receive larger bonuses but also show the effects to a higher degree. The effects documented are stronger for relative than for absolute performance assessment.
Number of Pages in PDF File: 36
Keywords: fund managers, fundamental information, incentives
JEL Classification: G14, G23
Date posted: February 18, 2009
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