Managerial rents vs. shareholder value in delegated portfolio management: The case of closed-end funds

Youchang Wu, Russell Wermers () and Josef Zechner

No 548, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: We examine the dynamics of assets under management (AUM) and management fees at the portfolio manager level in the closed-end fund industry. We find that managers capitalize on good past performance and favorable investor perception about future performance, as reflected in fund premiums, through AUM expansions and fee increases. However, the penalties for poor performance or unfavorable investor perception are either insignificant, or substantially mitigated by manager tenure. Long tenure is generally associated with poor performance and high discounts. Our findings suggest substantial managerial power in capturing CEF rents. We also document significant diseconomies of scale at the manager level.

Keywords: Closed-end fund; Closed-end fund discount; Managerial rent (search for similar items in EconPapers)
JEL-codes: G23 G34 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Journal Article: Managerial Rents vs. Shareholder Value in Delegated Portfolio Management: The Case of Closed-End Funds (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:548

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