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Are Mutual Fund Managers Paid For Investment Skill?

Marcus Ibert, Ron Kaniel, Stijn Van Nieuwerburgh and Roine Vestman

No 12010, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Compensation of mutual fund managers is paramount to understanding agency frictions in asset delegation. We collect a unique registry-based data set 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.

Keywords: financial sector income; mutual fund performance; Portfolio manager compensation (search for similar items in EconPapers)
JEL-codes: G00 G23 J24 J31 J33 J44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fmk and nep-hrm
Date: 2017-04
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Journal Article: Are Mutual Fund Managers Paid for Investment Skill? (2018) Downloads
Working Paper: Are Mutual Fund Managers Paid For Investment Skill? (2017) Downloads
Working Paper: Are Mutual Fund Managers Paid For Investment Skill? (2017) Downloads
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