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The Role of Corruption, Culture, and Law in Investment Fund Manager Fees

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Author Info

  • Sofia Johan

    ()

  • Dorra Najar

    ()

Abstract

This article considers an international sample of venture capital and private equity funds to assess the role of law, corruption, and culture in setting fund manager fees. With better legal conditions, fixed fees are lower, carried interest fees are higher, clawbacks are less likely, and share distributions are more likely. Countries with lower levels of corruption have lower fixed fees and higher performance fees, and are less likely to have clawbacks and cash-only distributions. Hofstede’s measure of power distance is negatively related to fixed fees and the use of cash-only distributions, but positively related to performance fees and clawbacks. Overall, the data strongly indicate that corruption, culture, and legal settings are much more significant in determining fees than fund manager characteristics and/or market conditions.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s10551-011-0852-7
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Bibliographic Info

Article provided by Springer in its journal Journal of Business Ethics.

Volume (Year): 95 (2010)
Issue (Month): 2 (September)
Pages: 147-172

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Handle: RePEc:kap:jbuset:v:95:y:2010:i:2:p:147-172

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Web page: http://www.springerlink.com/link.asp?id=100281

Related research

Keywords: managerial compensation; incentive contracts; private equity; law and finance; G23; G24; G28; K22; K34;

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References

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Citations

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Cited by:
  1. Dorra Najar, 2014. "Fund Managers Fees: Estimation and Sensitivity Analysis Using Monte Carlo Simulation," Working Papers 2014-195, Department of Research, Ipag Business School.
  2. Mehri, Meryem, 2014. "The Differential Effects of Law, Culture and Political Risk on Fees, Performance and Risk-Taking Behavior of Islamic and Conventional Funds," Economics Papers from University Paris Dauphine 123456789/13099, Paris Dauphine University.
  3. Douglas Cumming & Grant Fleming & Sofia Johan & Mai Takeuchi, 2010. "Legal Protection, Corruption and Private Equity Returns in Asia," Journal of Business Ethics, Springer, vol. 95(2), pages 173-193, September.

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