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Fund families as delegated monitors of money managers

Publication ,  Journal Article
Gervais, S; Lynch, AW; Musto, DK
Published in: Review of Financial Studies
December 1, 2005

Because a money manager learns more about her skill from her management experience than outsiders can learn from her realized returns, she expects inefficiency in future contracts that condition exclusively on realized returns. A fund family that learns what the manager learns can reduce this inefficiency cost if the family is large enough. The family's incentive is to retain any given manager regardless of her skill but, when the family has enough managers, it adds value by boosting the credibility of its retentions through the firing of others. As the number of managers grows, the efficiency loss goes to zero.

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Published In

Review of Financial Studies

DOI

EISSN

1465-7368

ISSN

0893-9454

Publication Date

December 1, 2005

Volume

18

Issue

4

Start / End Page

1139 / 1169

Related Subject Headings

  • Finance
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1502 Banking, Finance and Investment
  • 1402 Applied Economics
  • 1401 Economic Theory
 

Citation

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Gervais, S., Lynch, A. W., & Musto, D. K. (2005). Fund families as delegated monitors of money managers. Review of Financial Studies, 18(4), 1139–1169. https://doi.org/10.1093/rfs/hhi031
Gervais, S., A. W. Lynch, and D. K. Musto. “Fund families as delegated monitors of money managers.” Review of Financial Studies 18, no. 4 (December 1, 2005): 1139–69. https://doi.org/10.1093/rfs/hhi031.
Gervais S, Lynch AW, Musto DK. Fund families as delegated monitors of money managers. Review of Financial Studies. 2005 Dec 1;18(4):1139–69.
Gervais, S., et al. “Fund families as delegated monitors of money managers.” Review of Financial Studies, vol. 18, no. 4, Dec. 2005, pp. 1139–69. Scopus, doi:10.1093/rfs/hhi031.
Gervais S, Lynch AW, Musto DK. Fund families as delegated monitors of money managers. Review of Financial Studies. 2005 Dec 1;18(4):1139–1169.
Journal cover image

Published In

Review of Financial Studies

DOI

EISSN

1465-7368

ISSN

0893-9454

Publication Date

December 1, 2005

Volume

18

Issue

4

Start / End Page

1139 / 1169

Related Subject Headings

  • Finance
  • 3801 Applied economics
  • 3502 Banking, finance and investment
  • 1502 Banking, Finance and Investment
  • 1402 Applied Economics
  • 1401 Economic Theory