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Bonus Payments and Fund Managers' Behaviour: Trans-Atlantic Evidence

36 Pages Posted: 18 Feb 2009  

Thomas Gehrig

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)

Torben Lütje

University of Hannover

Lukas Menkhoff

German Institute for Economic Research (DIW Berlin); Humboldt University of Berlin - Faculty of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: January 2009

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.

Keywords: fund managers, fundamental information, incentives

JEL Classification: G14, G23

Suggested Citation

Gehrig, Thomas and Lütje, Torben and Menkhoff, Lukas, Bonus Payments and Fund Managers' Behaviour: Trans-Atlantic Evidence (January 2009). CEPR Discussion Paper No. DP7118. Available at SSRN: https://ssrn.com/abstract=1345644

Thomas Gehrig (Contact Author)

University of Vienna - Faculty of Business, Economics, and Statistics ( email )

Vienna, A-1210
Austria

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Vienna Graduate School of Finance (VGSF) ( email )

Nordbergstraße 15
Vienna, 1090
Austria

Torben Lütje

University of Hannover ( email )

Koenigsworther Platz 1
30167 Hannover
Germany
+49 511 762 4554 (Phone)
+49 511 762 4796 (Fax)

Lukas Menkhoff

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Humboldt University of Berlin - Faculty of Economics ( email )

Spandauer Strasse 1
Berlin
Germany

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