We derive equilibrium asset prices when fund managers deviate from benchmark indices to exploit noise-trader induced … distortions but fund investors constrain these deviations. Because constraints force managers to buy assets that they underweight …. Noise traders bias prices upward because constraints make it harder for managers to underweight overvalued assets, which …

We propose a family of incentive contracts that can attract some fund managers who are favored by investors and deter … explicitly on the utilities of the managers and investors nor have a menu of choices. The contracts have two crucial components …

corroborate these findings to reveal more pronounced effects when fund managers have stronger career incentives and are less …

We study the joint determination of fund managers' contracts and equilibrium asset prices. Because of agency frictions …, investors make managers' fees more sensitive to performance and benchmark performance against a market index. This makes … managers unwilling to deviate from the index and exacerbates price distortions. Because trading against overvaluation exposes …

different risk-taking behavior of fund managers is encouraged by the asymmetric delivery of information on fund returns. Unlike …

, socially responsible investments place expectations on SRI fund managers, that manifest in different risk management and agency …