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Are Mutual Fund Managers Paid For Investment Skill?

Listed author(s):
  • Markus Ibert
  • Ron Kaniel
  • Stijn Van Nieuwerburgh
  • Roine Vestman

Compensation of mutual fund managers is paramount to understanding agency frictions in asset delegation. We collect a unique registry-based dataset on the compensation of Swedish mutual fund managers. We find a concave relationship between pay and revenue, in contrast to how investors compensate the fund company (firm). We also find a surprisingly weak sensitivity of pay to performance, even after accounting for the indirect effects of performance on revenue. Firm-level revenues and profits add substantial explanatory power for compensation to manager-level revenue and performance, highlighting the importance of the mutual fund firm.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 23373.

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Date of creation: Apr 2017
Handle: RePEc:nbr:nberwo:23373
Note: AP CF LS
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