Faculty of Law
The Hebrew University, Mount Scopus
Jerusalem 91905, Israel
NBER Working Papers and Publications
|September 2016||Incentive Fees and Competition in Pension Funds: Evidence from a Regulatory Experiment|
with Eugene Kandel, Yevgeny Mugerman, Yishay Yafeh: w22634
Concerned with excessive risk taking, regulators worldwide generally prohibit private pension funds from charging performance-based fees. Instead, the premise underlying the regulation of private pension schemes (and other retail-oriented funds) is that competition among fund managers should provide them with the adequate incentives to make investment decisions that would serve their clients’ long-term interests. Using a regulatory experiment from Israel, we compare the effects of incentive fees and competition on the performance of three exogenously-given types of long-term savings schemes operated by the same management companies: (i) funds with performance-based fees, facing no competition; (ii) funds with AUM-based fees, facing low competitive pressure; and (iii) funds with AUM-based f...
|January 2002||Optimal Defaults for Corporate Law Evolution|
with Lucian Arye Bebchuk: w8703
Public corporations live in a dynamic and ever-changing business environment. This paper examines how courts and legislators should choose default arrangements in the corporate area to address new circumstances. We show that the interests of the shareholders of existing companies would not be served by adopting those defaults arrangements that public officials view as most likely to be value-enhancing. Because any charter amendment requires the board's initiative, opting out of an inefficient default arrangement is much more likely to occur when management disfavors the arrangement than management supports it. We develop a 'reversible defaults' approach that takes into account this asymmetry. When public officials must choose between two or more default arrangements and face significant un...
Published: Bebchuk, Lucian Arye and Assaf Hamdani. "Optimal Defaults for Corporate Law Evolution." Northwestern Law Review 96 (2002): 489-520.