Work

Outcomes, risk-taking, and incentives: Evidence from asset managers

Year: 2026

Type: article

Abstract: We study incentive contracts used by asset management firms in Norway, focusing on how bonus structures impact performance. The incentive contracts in our sample are heterogeneous, with firms rewarding fund managers based on both quantitative and qualitative targets. We find that higher potential bonuses tied to quantitative metrics, such as the information ratio, lead to better risk-adjusted performance at year-end. Managers at risk of missing bonus thresholds attempt to boost performance through portfolio adjustments, but these efforts backfire, resulting in worse outcomes in the latter part of the year.

Source: Journal of Corporate Finance

DOI: 10.1016/j.jcorpfin.2026.102974

Authors: Carsten Bienz, Diego Bonelli, Aksel Mjøs, Francisco Santos

Institutions: Norwegian School of Economics, Bank of Spain

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $4,140