Are Mutual Fund Managers Paid For Investment Skill?
AbstractCompensation of mutual fund managers is paramount to understanding agency frictions in
asset delegation. We collect a unique registry-based dataset on the compensation of Swedish mutual
fund managers. We find a concave relationship between pay and revenue, in contrast to how
investors compensate the fund company (firm). We also find a surprisingly weak sensitivity of pay
to performance, even after accounting for the indirect effects of performance on revenue.
Firm-level fixed effects, revenues, and profits add substantial explanatory power for compensation
to manager-level revenue and performance.