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

  • Sofia Johan

    ()

  • Dorra Najar

    ()

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.

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