Do Mutual Fund Managers Monitor Executive Compensation?
نویسندگان
چکیده
We find significant relations between active mutual fund portfolio holdings and executive compensation, which appear to be largely driven by mutual fund investment styles rather than monitoring behaviour. Aggressive growth fund holdings are associated with performance pay, while income fund holdings are negatively related. We also find that mutual fund holdings are insensitive to changes in executive compensation and that growth funds demand incentive pay that is in excess of optimal levels. Our results suggest that one explanation for the lack of observed monitoring is mutual funds fail to realise any significant risk-adjusted excess returns from such behaviour. JEL classification: G23, G32, J33
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