Abstract

https://ssrn.com/abstract=7460
 


 



Of Tournaments and Temptations: An Analysis of Managerial Incentives in the Mutual Fund Industry


Keith C. Brown


University of Texas at Austin - Department of Finance

W. Van Harlow


Fidelity Investments

Laura T. Starks


University of Texas at Austin - Department of Finance


J. OF FINANCE, Vol. 51 No. 1, March 1996

Abstract:     
We test the hypothesis that when their compensation is linked to relative performance, managers of investment portfolios likely to end up as "losers" will manipulate fund risk differently than those managing portfolios likely to be "winners." An empirical investigation of the performance of 334 growth-oriented mutual funds during 1976 to 1991 demonstrates that mid-year losers tend to increase fund volatility in the latter part of an annual assessment period to a greater extent than mid-year winners. Further, we show that this effect became stronger as industry growth and investor awareness of fund performance increased over time.

JEL Classification: G10


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Date posted: June 28, 1998  

Suggested Citation

Brown, Keith C. and Harlow, W. Van and Starks, Laura T., Of Tournaments and Temptations: An Analysis of Managerial Incentives in the Mutual Fund Industry. J. OF FINANCE, Vol. 51 No. 1, March 1996. Available at SSRN: https://ssrn.com/abstract=7460

Contact Information

Keith C. Brown
University of Texas at Austin - Department of Finance ( email )
Red McCombs School of Business
Austin, TX 78712
United States
512-471-6520 (Phone)
512-471-5073 (Fax)

W. Van Harlow
Fidelity Investments ( email )
82 Devonshire Street
Boston, MA 02109
United States
617-563-2673 (Phone)
617-476-9762 (Fax)
Laura T. Starks (Contact Author)
University of Texas at Austin - Department of Finance ( email )
Red McCombs School of Business
Austin, TX 78712
United States
512-471-5899 (Phone)
512-471-5073 (Fax)

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