DP7118 Bonus Payments and Fund Managers? Behaviour: Trans-Atlantic Evidence
|Author(s):||Thomas Gehrig, Torben Lütje, Lukas Menkhoff|
|Publication Date:||January 2009|
|Keyword(s):||fund managers, fundamental information, incentives|
|Programme Areas:||Financial Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=7118|
This questionnaire survey of fund managers in the United States, Germany and Switzerland documents a distinctly positive influence of bonus payments on investment behaviour on both sides of the Atlantic. Higher bonus payments are significantly related to higher working effort but not to risk taking. They also seem to induce fund managers to rely more on fundamental information. Findings within regions are confirmed by Trans-Atlantic evidence as US fund managers receive larger bonuses but also show the effects to a higher degree. The effects documented are stronger for relative than for absolute performance assessment.