Department of Economics
Jerusalem 91905, Israel
Information about this author at RePEc
NBER Working Papers and Publications
|September 2016||Incentive Fees and Competition in Pension Funds: Evidence from a Regulatory Experiment|
with Assaf Hamdani, 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...
|December 2013||The Great Pyramids of America: A Revised History of US Business Groups, Corporate Ownership and Regulation, 1930-1950|
with Konstantin Kosenko, Randall Morck, Yishay Yafeh: w19691
Most listed firms are freestanding in the U.S, while listed firms in other countries often belong to business groups: lasting structures in which listed firms control other listed firms. Hand-collected historical data illuminate how the present ownership structure of the United States arose: (1) Until the mid-20th century, US corporate ownership was unexceptional: large pyramidal groups dominated many industries; (2) About half of these resembled groups elsewhere today in being industrially diversified and family controlled; but the others were tightly focused and had widely held apex firms; (3) US business groups disappeared gradually, primarily in the 1940s, and by 1950 were largely gone; Their demise took place against growing concerns that they posed a threat to competition and even to...
|January 2008||Stock-Based Compensation and CEO (Dis)Incentives|
with Efraim Benmelech, Pietro Veronesi: w13732
Stock-based compensation is the standard solution to agency problems between shareholders and managers. In a dynamic rational expectations equilibrium model with asymmetric information we show that although stock-based compensation causes managers to work harder, it also induces them to hide any worsening of the firm's investment opportunities by following largely sub-optimal investment policies. This problem is especially severe for growth firms, whose stock prices then become over-valued while managers hide the bad news to shareholders. We find that a firm-specific compensation package based on both stock and earnings performance instead induces a combination of high effort, truth revelation and optimal investments. The model produces numerous predictions that are consistent with the emp...
Published: Efraim Benmelech & Eugene Kandel & Pietro Veronesi, 2010.
"Stock-Based Compensation and CEO (Dis)Incentives,"
The Quarterly Journal of Economics,
MIT Press, vol. 125(4), pages 1769-1820, November.
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