36 Pages Posted: 18 Feb 2009
Date Written: January 2009
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: 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
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