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 exe...

In this paper, I analyze re-pricing decisions for mutual fund management services. I derive measures of performance and price sensitivity and show that investors do not consider expense ratios simply as a negative component of expected returns: while performance sensitivity monotonically increases with past performance, price-sensitivity does not. Investors that buy top pastperformers seems to ...

We consider the problem of a mutual fund manager that maximizes the present value of expected fees and has to decide the level of fee to impose on the fund. The fee will be paid by a risk averse investor that maximizes expected utility over final wealth. This investor can invest either in an indexed fund or in a managed fund. The manager has superior ability and, as a result of it, the fund off...

Using survivorship bias-free datasets to rank fund performance introduces a market climate bias that depends on the lengths of the funds’ return histories. Based on Carhart’s (1997) four-factor model, we analytically show how the market climate affects commonly used performance measures. Our empirical results confirm that this market climate bias creates different rankings depending on the meas...