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Bonus Payments and Fund Managers' Behaviour: Trans-Atlantic EvidenceThomas GehrigUniversity 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) Torben LütjeUniversity of Hannover Lukas MenkhoffLeibniz Universitaet Hannover - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) January 2009 CEPR Discussion Paper No. DP7118 Abstract: 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 working papers seriesDate posted: February 18, 2009Suggested CitationContact Information
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