kaal:claim:1428387-009

Because net asset value drives subscriptions, redemptions, performance calculations, advertising, and fees, managers who both manage and value the portfolio have both an incentive and the ability to inappropriately over-value their portfolios.

Source quote, verbatim

Given the conflicting responsibilities, managers have an incentive and the ability to inappropriately over-value their portfolios.27

From

Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009), II.C Conflict of Interest of the Manager, p. 9
https://ssrn.com/abstract=1428387 · source PDF

Cite as

Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387

Holds when

where the manager performs or controls valuation
where NAV is the basis for fees and performance figures

Classification

mechanismsupport: arguedfailure: manager-self-valuationfamily: valuation-and-pricing-failurerisk-and-incentiveseconomics

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