Journal article
Role of Managerial Incentives and Discretion in Hedge Fund Performance
The Journal of finance (New York), v 64(5), pp 2221-2256
01 Oct 2009
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
Using a comprehensive hedge fund database, we examine the role of managerial incentives and discretion in hedge fund performance. Hedge funds with greater managerial incentives, proxied by the delta of the option-like incentive fee contracts, higher levels of managerial ownership, and the inclusion of high-water mark provisions in the incentive contracts, are associated with superior performance. The incentive fee percentage rate by itself does not explain performance. We also find that funds with a higher degree of managerial discretion, proxied by longer lockup, notice, and redemption periods, deliver superior performance. These results are robust to using alternative performance measures and controlling for different data-related biases.
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Details
- Title
- Role of Managerial Incentives and Discretion in Hedge Fund Performance
- Creators
- Vikas Agarwal - Georgia State UniversityNaveen D. Daniel - Purdue University SystemNarayan Y. Naik - London Business School
- Publication Details
- The Journal of finance (New York), v 64(5), pp 2221-2256
- Publisher
- Wiley
- Number of pages
- 36
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000270236200008
- Scopus ID
- 2-s2.0-68949192027
- Other Identifier
- 991019167775904721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance
- Economics