Fostering the best execution regime: An experiment about pecuniary sanctions and accountability in fiduciary money management

Sandro Casal, Matteo Ploner and Alec N. Sproten

No 13/2014, FAU Discussion Papers in Economics from Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics

Abstract: Asset management often involves a conflict of interests between investors and fund managers. A main goal of financial regulators is to identify and mitigate this conflict. This article focuses on measures that may foster protection of investors' interests. In an experiment capturing the essential elements of asset management, we find that managers' accountability does not prevent their opportunistic behavior if not backed by a threat of punishment. Further, investors inefficiently sanction managers if not completely aware of managers' choices. To effectively protect investors in financial intermediations, financial regulators should ensure both managers' accountability and a credible sanctioning system.

Keywords: Delegated risky decisions; Monetary conflict of interest; Asset management; Experiment (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-mac
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Related works:
Journal Article: FOSTERING THE BEST EXECUTION REGIME: AN EXPERIMENT ABOUT PECUNIARY SANCTIONS AND ACCOUNTABILITY IN FIDUCIARY MONEY MANAGEMENT (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwqwdp:132014

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