Working Paper: NBER ID: w23373
Authors: Markus Iber; Ron Kaniel; Stijn van Nieuwerburgh; Roine Vestman
Abstract: Compensation of mutual fund managers is paramount to understanding agency frictions in asset delegation. We collect a unique registry-based dataset on the compensation of Swedish mutual fund managers. We find a concave relationship between pay and revenue, in contrast to how investors compensate the fund company (firm). We also find a surprisingly weak sensitivity of pay to performance, even after accounting for the indirect effects of performance on revenue. Firm-level revenues and profits add substantial explanatory power for compensation to manager-level revenue and performance, highlighting the importance of the mutual fund firm.
Keywords: Mutual funds; Manager compensation; Performance evaluation; Agency theory
JEL Codes: G00; G11; G20; G23; G24; J3; J31; J33; J44
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Revenue (H29) | Manager Compensation (M12) |
| Firm-Level Characteristics (L25) | Manager Compensation (M12) |
| Abnormal Returns (G14) | Manager Compensation (M12) |
| Manager Revenue (Z23) | Manager Compensation (M12) |
| Firm-Level Characteristics (L25) | Sensitivity of Pay to Manager Revenue (M52) |