The Tournament Phenomenon Beyond Agency Theory: Behavioral Economic Experiment

• Published in: Journal of portfolio management Vol. 42; no. 3; pp. 124 - 139
• Main Authors: Borisov, Boris G., Lueg, Rainer
• Format: Journal Article
• Language: English
• Published: London Pageant Media 01.03.2016
• Subjects: Agency theory; Behavior; Behavioral economics; Corporate governance; Hedge funds; Hypotheses; Incentives; Investments; Mutual funds; Portfolio management; Studies; Tournaments & championships; Wages & salaries

The tournament phenomenon suggests that fund managers with above-the-median first-half performance tend to decrease the second-half risk of their investments, and vice versa. The prevailing interpretation of agency theory argues that managers compete in an annual tournament for capital inflows. Howe...