Strength of Performance Based Compensation: Evidence from Hedge Fund Closing and Reopening Events

摘要：

Previous results find CEOs’ pay packages typically have low sensitivities to performance. Therefore, CEOs have incentives to increase firm size, even if those actions cause losses for current shareholders. Using nine versions of the Lipper/TASS Data, we investigate if hedge fund mangers’ higher pay-performance sensitivities cause them to act in their current investors’ best interests by limiting assets. While our results show closed hedge funds do experience significantly lower flows, managers’ and management companies’ primary objective is to hoard assets. These results suggest even high pay-performance deltas are not strong enough to overcome additional fees generated from larger amounts of assets. Other monitoring mechanisms are necessary to reduce agency costs for investors.

作者: Bing Liang Christopher Schwarz

作者单位: Isenberg School of Management, University of Massachusetts, Amherst, MA 01003 University of California at Irvine, Paul Merage School of Business, Irvine, CA 92697-3125

会议类型: 国际会议

会议名称: 2009年中国金融国际年会

会议地点: 广州

会议语种:英文

页码: 1-40

在线出版日期: 2009-07-07（万方平台首次上网日期，不代表论文的发表时间）