# Manager incentives

`kaal:entity:manager-incentives`

**Status.** derived

This node is assembled mechanically from the 6 claims that carry the concept tag `manager-incentives`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

6 claims across 3 works, 2009 to 2017.

**2009**

- [1428387-006](https://wulfkaal.github.io/claims/1428387-006) [mechanism/argued] -- 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.
  > 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.
  Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387
- [1428387-007](https://wulfkaal.github.io/claims/1428387-007) [mechanism/argued] -- The hedge fund fee structure creates very strong financial incentives for managers to hide weak performance through valuation.
  > The fee structure of hedge funds creates very strong financial incentives to hide weak performance by way of valuation. Hedge
  Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387
- [1428387-009](https://wulfkaal.github.io/claims/1428387-009) [mechanism/argued] *(failure mode)* -- 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.
  > Given the conflicting responsibilities, managers have an incentive and the ability to inappropriately over-value their portfolios.27
  Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387
- [1428387-036](https://wulfkaal.github.io/claims/1428387-036) [failure/argued] *(failure mode)* -- 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.
  > 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
  Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387

**2016**

- [2748096-017](https://wulfkaal.github.io/claims/2748096-017) [mechanism/argued] -- 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.
  > 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.
  Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096

**2017**

- [2998097-035](https://wulfkaal.github.io/claims/2998097-035) [mechanism/argued] -- 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.
  > 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
  Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097

## Verify

Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust.

    curl -s https://wulfkaal.github.io/entities/manager-incentives.md | sha256sum

**Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.