Fund Flows and Income Risk of Fund Managers

70 Pages Posted: 18 Sep 2023 Last revised: 19 Apr 2024

See all articles by Xiao Cen

Xiao Cen

Mays Business School, Texas A&M University

Winston Wei Dou

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Leonid Kogan

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Wei Wu

Texas A&M University

Multiple version iconThere are 2 versions of this paper

Date Written: April 27, 2023

Abstract

We develop a unique dataset, the first-ever of its kind, by leveraging the US Census Bureau's LEHD program and various big textual data sources, to examine the factors influencing the compensation and career trajectories of US active equity mutual fund managers. We find that managers' compensation is primarily determined by assets under management (AUM), with return performance directly influencing bonuses beyond its impact on AUM. Despite not aligning with client interests, fund flows significantly affect manager compensation and career outcomes. Large fund outflows increase a manager's likelihood of job turnover (with a substantial decline in compensation) by 4 percentage points.

Keywords: Fund managers, Manager compensation, Career concerns, Mutual fund flows, Fund performance

JEL Classification: G11, G23, J24, J31, J33, J44

Suggested Citation

Cen, Xiao and Dou, Winston Wei and Kogan, Leonid and Wu, Wei, Fund Flows and Income Risk of Fund Managers (April 27, 2023). Jacobs Levy Equity Management Center for Quantitative Financial Research Paper , Available at SSRN: https://ssrn.com/abstract=4562474 or http://dx.doi.org/10.2139/ssrn.4562474

Xiao Cen

Mays Business School, Texas A&M University ( email )

430 Wehner
College Station, TX 77843-4218
United States

Winston Wei Dou (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/winston_wei_dou?page=1&perPage=50

Leonid Kogan

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-636
Cambridge, MA 02142
United States
617-253-2289 (Phone)
617-258-6855 (Fax)

HOME PAGE: http://web.mit.edu/lkogan2/www/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Wei Wu

Texas A&M University ( email )

360M Wehner
College Station, TX 77843-4218
United States
979-862-8092 (Phone)

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