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 "identifier": "kaal:entity:manager-incentives",
 "name": "Manager incentives",
 "termCode": "manager-incentives",
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 "author": {
  "@type": "Person",
  "name": "Wulf A. Kaal",
  "identifier": "https://orcid.org/0000-0003-0757-275X"
 },
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   "value": [
    "2009",
    "2017"
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  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/1428387-006",
   "identifier": "kaal:claim:1428387-006",
   "text": "Because realization events for private equity investments occur infrequently, hedge fund managers have an incentive to avoid side pockets and to use estimated valuations for those investments instead.",
   "abstract": "The infrequency of realization events of private equity investments creates incentives for hedge fund managers to avoid side pockets and instead use estimates for the valuation of private equity investments.",
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "datePublished": "2009",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "where the hedge fund holds private equity style investments",
    "where performance fees cannot be charged on side-pocketed assets"
   ],
   "source_pdf_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/1428387-007",
   "identifier": "kaal:claim:1428387-007",
   "text": "The hedge fund fee structure creates very strong financial incentives for managers to hide weak performance through valuation.",
   "abstract": "The fee structure of hedge funds creates very strong financial incentives to hide weak performance by way of valuation. Hedge",
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "datePublished": "2009",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "where fees run up to 30 percent of profits and one to three percent of assets under management",
    "where high water marks apply"
   ],
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  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/1428387-009",
   "identifier": "kaal:claim:1428387-009",
   "text": "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.",
   "abstract": "Given the conflicting responsibilities, managers have an incentive and the ability to inappropriately over-value their portfolios.27",
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "datePublished": "2009",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "where the manager performs or controls valuation",
    "where NAV is the basis for fees and performance figures"
   ],
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   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/1428387-036",
   "identifier": "kaal:claim:1428387-036",
   "text": "A retail investor asset threshold would be gamed: managers would be incentivized to keep retail assets under the applicable threshold, thereby keeping the fund in the existing regulatory scheme without implementing additional retail investor protection.",
   "abstract": "Managers would be incentivized to keep the assets from retail investors under the applicable retail investor asset threshold. Therefore, they would keep the fund in the current regulatory scheme without implementing additional protection for retail investors. Arguably, this would at least make",
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "datePublished": "2009",
   "claim_type": "failure",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "where regulation is triggered by a retail asset threshold"
   ],
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   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2748096-017",
   "identifier": "kaal:claim:2748096-017",
   "text": "The performance pressure on hedge fund managers incentivizes them to take disproportionately high risks in order to deliver sufficient client returns, and those disproportionate risks translate into proportional systemic risks.",
   "abstract": "Arguably, in order to obtain sufficient returns for their clients, hedge fund managers are incentivized to take disproportionately high risks in their management strategies, which can translate into proportional systemic risks.",
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "datePublished": "2016",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "holds where managers must generate returns sufficient to retain clients"
   ],
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   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2998097-035",
   "identifier": "kaal:claim:2998097-035",
   "text": "Merging the regulatory requirements applicable to mutual funds with the formerly distinct rules applicable to private investment funds creates incentives for private investment managers to set up retail alternative funds.",
   "abstract": "Merging the regulatory requirements applicable to mutual funds with the formerly more distinct rules applicable to private investment funds creates incentives for private investment managers to set up retail alternative funds.188 A higher supply of retail alternative funds, in",
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "datePublished": "2017",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "provisions of the Dodd-Frank Act that assimilated mutual and hedge fund legal requirements"
   ],
   "source_pdf_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "status": "current"
  }
 ],
 "description": "6 claims in the published works of Wulf A. Kaal carry the concept tag 'manager-incentives'. Derived node: a roster, not an adjudicated definition."
}