Time-varying incentives in the mutual fund industry

• Main Authors: OLIVIER, Jacques, TAY, Anthony S.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2008
• Subjects: Mutual funds; Incentives; Flow-Performance Relationship; Convexity; Business Cycles; Econometrics; Finance
• Online Access: https://ink.library.smu.edu.sg/soe_research/1115; https://ink.library.smu.edu.sg/context/soe_research/article/2114/viewcontent/OlivierTay2008.pdf
• Institution: Singapore Management University

This paper re-examines the incentives of mutual fund managers arising from investor flows. We provide evidence that the convexity of the flow-performance relationship varies with economic activity. We show that the effect is economically large and is not driven by abnormal years. We test two possibl...