Contrary to popular opinion, research shows that HF managers won’t necessarily go “all-in” to win big
| Aug 19th, 2010 | Filed under: Academic Research, Investment Management Fees, Today's Post | By: AAA Staff |
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If there are two sins that mix extremely well together, it is booze and gambling. While the odds certainly favor the house on the gambling side of things, they increase even more once alcohol is thrown in, as many can certainly attest. Indeed, while hardly empirical, most pit bosses can certainly vouch that the more alcohol consumed, the greater the amount of risk that gets tossed onto the table.
A revised version of a paper published not too long ago by HEC Montreal PhD student Serge Patrick Amvella Motaze entitled, Managerial Incentives and the Risk-Taking Behavior of Hedge Fund Managers (click here to download from SSRN) considers roughly the same concept: Do hedge fund managers take greater risks when “drunk” off the potential of pulling in a greater reward for their efforts?
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