We develop a principal-agent model based on a sequential game played by a representative investor and a fund manager in an asymmetric information framework. The model shows that investors' perceptions of the fund market play the key role in the fund's fee-setting mechanism. The managers' true...

We examine the role of the disposition effect in market efficiency following the arrival of private signals to a small group of informed traders. Subjects trade an ambiguous asset via a computer-based double auction. Using a 2x2x2 design, we endow two types of signal, i.e., positive vs....

Using microdata on stock-level lending positions from German mutual funds, we show that active funds use the equity lending market to obtain information about short sale demand. Funds reduce long positions in response to these demand signals, which allows fund managers to front-run public...

The discount control mechanisms that closed-end funds often choose to adopt before IPO are supposedly implemented to narrow the difference between share price and net asset value, We find evidence that non-discretionary discount control mechanisms such as mandatory continuation votes serve as...

This paper examines the use of private information by mutual funds with unconditional and conditional performance models. Using daily data for 35 countries over the 1990-2015 period, we find evidence that the use of conditioning information provides a more accurate estimation of fund...