Indirect Incentives of Hedge Fund Managers

• 成果类型: Article
• 署名作者: Lim, Jongha; Sensoy, Berk A.; Weisbach, Michael S.
• 署名单位: California State University System; California State University Fullerton; University System of Ohio; Ohio State University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12384
• 发表日期: 2016
• 页码: 871-918
• 关键词: HIGH-WATER MARKS; PRIVATE EQUITY; capacity constraints; performance; FLOWS; COMPENSATION; industry; returns; BEHAVIOR; RISK

摘要

Indirect incentives exist in the money management industry when good current performance increases future inflows of capital, leading to higher future fees. For the average hedge fund, indirect incentives are at least 1.4 times as large as direct incentives from incentive fees and managers' personal stakes in the fund. Combining direct and indirect incentives,manager wealth increases by at least $0.39 for a $1 increase in investor wealth. Younger and more scalable hedge funds have stronger flow-performance relations, leading to stronger indirect incentives. These results have a number of implications for our understanding of incentives in the asset management industry.