NDLI: Study on the Influence of Benchmark on the Design of Fund Incentive Contract Based on the Effort and Risk Choice of Manager

Content Provider	IEEE Xplore Digital Library
Author	Cao Xing Peng Geng
Copyright Year	2008
Description	Author affiliation: Sch. of Bus., Central South Univ., Changsha (Cao Xing; Peng Geng)
Abstract	In this paper the ability of effort and risk choice of fund manager are considered simultaneously and both are related together by model settings. Under the case of observable effort and unobservable effort respectively, the influence of benchmark on the parameters selection of incentive contract is studied. The research discovers that under the case of observable effort of manager the benchmark has not any effect on the parameters of contract, but the contract based on benchmark can help investors to screen the ability of manager. Under the case of unobservable effort of manager, benchmark introduced into contract has the incentive effect. The paper indicates when the risk of benchmark increase, owing to the risk aversion the manager demands to enhance the sharing proportion of absolute return of fund and reduce the sharing proportion of relative return to benchmark, through which the risk-taking by manager decrease. The research proves that under the condition of asymmetric information benchmark introduced into contract also can help investors to understand the manager.
Starting Page	1
Ending Page	5
File Size	121909
Page Count	5
File Format	PDF
ISBN	9781424421077
DOI	10.1109/WiCom.2008.2295
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2008-10-12
Publisher Place	China
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Investments Communication system control Communication channels Appraisal Risk management Risk analysis Contracts Portfolios Monitoring
Content Type	Text
Resource Type	Article

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