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

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  • Gehrig, Thomas
  • Menkhoff, Lukas
  • Lütje, Torben

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.

Suggested Citation

  • Gehrig, Thomas & Menkhoff, Lukas & Lütje, Torben, 2009. "Bonus Payments and Fund Managers? Behaviour: Trans-Atlantic Evidence," CEPR Discussion Papers 7118, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:7118
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    2. Kent Matthews & Owen Matthews, 2010. "Controlling Bankers' Bonuses: Efficient Regulation Or Politics Of Envy?," Economic Affairs, Wiley Blackwell, vol. 30(1), pages 71-76, March.
    3. Justyna Przychodzen & Fernando Gómez-Bezares & Wojciech Przychodzen & Mikel Larreina, 2016. "ESG Issues among Fund Managers—Factors and Motives," Sustainability, MDPI, vol. 8(10), pages 1-19, October.

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    More about this item

    Keywords

    Fund managers; Fundamental information; Incentives;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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