Date
2011
Dewey
Economie financière
Sujet
Managerial Compensation; Incentive Contracts; Private Equity; Law and Finance
JEL code
G23; G24; G28; K22; K34
Conference name
Annual Meeting of the Midwest Finance Association
Conference date
03-2011
Conference city
Chicago
Conference country
États-Unis
Author
Johan, Sofia
Najar, Dorra
Type
Communication / Conférence
Item number of pages
36
Abstract (EN)
This paper considers an international sample of venture capital and private equity funds to assess the role of law, corruption and culture in setting fund manager fees in terms
of their fixed management fees, carried interest performance fees, clawbacks of fees and cash versus share distributions of fees. The data highlight a role of legal conditions in
shaping fees paid to fund managers. In countries with better legal conditions, fixed fees are lower, carried interest fees are higher, clawbacks are less likely, and share distributions are
more likely. These findings suggest legal conditions help to align the interests of managers and shareholders. More specifically, we examine which element of legal conditions matter most, and discover that corruption levels play a pronounced role in shaping fund manager
fee contracts. We also show that cultural forces such as Hofstede`s measures of power
distance and uncertainty avoidance likewise play a role in influencing fees.