Empirical research in finance has documented a strong positive and convex relationship between investment performance and flows in and out of managed portfolios such as mutual funds. It is also well-known that fee contracts for portfolio managers give the manager a fixed-fraction of assets under...

Asset owners (principals) typically do not manage their own investments and leave this job to delegated managers (agents). What is best for the asset owner, however, is usually not best for the fund manager. Additional agency conflicts arise when the asset owner does not know the quality and...

The paper proposes a model of delegated portfolio management in which career concerns lead to unprofitable trade by uninformed managers (i.e. churning). We find that churning does not necessarily reduce the return that a representative investor expects ex-ante from delegating trade to a manager....

Social ties between mutual funds and the companies in which they invest (investees) can both facilitate information transfers and encourage favoritism. Using the investment choices of mutual funds in China, we compare investment performance of holdings in companies that are socially connected to...

The tendency of humans to shy away from using algorithms - even when algorithms observably outperform their human counterpart - has been referred to as algorithm aversion. We conduct an experiment to test for algorithm aversion in financial decision making. Participants acting as investors can...

We examine the governance role of delegated portfolio managers. In our model, investors decide how to allocate their wealth between passive funds, active funds, and private savings, and asset management fees are endogenously determined. Funds' ownership stakes and asset management fees determine...

This paper is about the corporate structure, the organizational structure, and the financial structure of firms, and how they relate to each other. We show that separation of ownership and control may arise as a response to overload costs, although it involves agency costs, and that...

We investigate the effect of CEO hedging on the likelihood and characteristics of M&A decisions. Because of their higher degree of risk tolerance, hedged CEOs are more likely to engage in M&As and are more likely to acquire private and smaller targets. M&A deals by hedged CEOs appear to create...