Delegated Portfolio Management, No Churning, and Relative Performance-Based Incentive/Sorting Schemes

Sudipto Bhattacharya

Working Papers from Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor.

Abstract: We show that optimal delegated portfolio management contracts-which serve to screen out uninformed agents and reward potentially informed agents sufficiently to compensate their opportunity and/or effort costs-need not imply churning, or randomised trading if uninformed, by the able screened agents, despite limited liability for them which limits the amount of screenable heterogeneity among agents.

Keywords: INVESTMENTS; PORTFOLIO; FINANCIAL INSTITUTIONS; STOCK MARKET (search for similar items in EconPapers)
JEL-codes: G11 G20 (search for similar items in EconPapers)
Pages: 16 pages
Date: 1999
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Citations: View citations in EconPapers (2)

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Working Paper: Delegated portfolio management, no churning, and relative performance-based incentive/sorting schemes (1999)
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