Lan, Yingcong; Wang, Neng; Yang, Jinqiang - 2011
"Hedge fund managers are compensated via management fees on the assets under management (AUM) and incentive fees … only paid via management fees, the manager optimally chooses time-invariant leverage to balance the size of allocation to … via both management and incentive fees, we show that (i) the high-powered incentive fees encourage excessive risk taking …