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Bonus Payments and Fund Managers' Behavior: Trans-Atlantic Evidence

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

Abstract

This questionnaire survey of fund managers in the United States, Germany and Switzerland documents a distinctly positive influence of bonus payments on investment behavior 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.

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Bibliographic Info

Paper provided by Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Leibniz Universität Hannover with number dp-411.

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Length: 33 pages
Date of creation: Dec 2008
Date of revision:
Handle: RePEc:han:dpaper:dp-411

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Keywords: Fund managers; incentives; fundamental information;

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