Incentive systems for stock portfolio managers in Sweden

Martin Hedesström (ted.hedesstrom@psy.gu.se)
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Martin Hedesström: Department of Psychology, University of Gothenburg, Gothenburg, Sweden, http://www.psy.gu.se

No 2010/2, Sustainable Investment and Corporate Governance Working Papers from Sustainable Investment Research Platform

Abstract: Interviews with Swedish investment professionals show that incentivising stock portfolio managers on the basis of short term returns performance is a widespread practice across several types of fund management. Among retail funds, state pension funds, and hedge funds, bonuses are predominantly based on one-year intervals. Longer-term bonus components, if offered, are generally of insignificant size. Small fund companies may offer longer-term bonuses, but then as incentive not only to produce good results but also – if results are good – to stay at the company for a longer time. Pension insurance companies also apply longer-term bonuses, possibly because they do not risk money being withdrawn by investors due to poor performance. Experimental studies are needed in order to disentangle the effects of longer term bonuses on sustainable investments.

Keywords: incentive system; compensation scheme; bonus; stock portfolio manager; shorttermism (search for similar items in EconPapers)
Pages: 16 pages
Date: 2009-12-20
New Economics Papers: this item is included in nep-fmk and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:hhb:sicgwp:2010_002

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