The Effects of Incentive Compensation Contracts on the Risk and Return Performance of Commodity Trading Advisors

The Effects of Incentive Compensation Contracts on the Risk and Return Performance of Commodity Trading Advisors

This paper shows that commodity trading advisors' (CTAs) investment performance may be partially explained by their incentive compensation contracts. Contracts include base, incentive and asset parameters. The relationships between contract parameters and performance are theoretically indetermi...

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Bibliographische Detailangaben
Veröffentlicht in:Management Science. - Institute for Operations Research and the Management Sciences, 1954. - 39(1993), 11, Seite 1396-1406
1. Verfasser: Golec, Joseph H. (VerfasserIn)
Format: Online-Aufsatz
Sprache:English
Veröffentlicht: 1993
Zugriff auf das übergeordnete Werk:Management Science
Schlagworte:Incentive Compensation Contracts Commodity Trading Advisors Agency Theory Commodity Fund Performance Options Business Behavioral sciences Mathematics Economics Law
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245 1 4 |a The Effects of Incentive Compensation Contracts on the Risk and Return Performance of Commodity Trading Advisors 
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520 |a This paper shows that commodity trading advisors' (CTAs) investment performance may be partially explained by their incentive compensation contracts. Contracts include base, incentive and asset parameters. The relationships between contract parameters and performance are theoretically indeterminate but are examined here empirically. Results indicate that incentive parameters are positively related to return means and standard deviations. The dollar amounts of assets CTAs manage are negatively related to return means and standard deviations, supporting Elton et al.'s (1987, 1989) finding that CTA performance falls after public offerings of commodity funds. Intuitively, since dollar fees are a function of assets, at the higher asset and fee levels achieved through commodity fund offerings, CTAs may safeguard assets and fees by pursuing less risky investment strategies. 
540 |a Copyright 1993 The Institute of Management Sciences 
650 4 |a Incentive Compensation Contracts 
650 4 |a Commodity Trading Advisors 
650 4 |a Agency Theory 
650 4 |a Commodity Fund Performance 
650 4 |a Options 
650 4 |a Business  |x Business operations  |x Commerce  |x Financial transactions  |x Payments  |x Fees 
650 4 |a Business  |x Business economics  |x Commercial production  |x Production factors  |x Production output  |x Commodities 
650 4 |a Behavioral sciences  |x Behavioral economics  |x Behavioral finance  |x Financial incentives  |x Contract incentives 
650 4 |a Mathematics  |x Applied mathematics  |x Statistics  |x Applied statistics  |x Descriptive statistics  |x Statistical distributions  |x Normal distribution curve  |x Standard deviation 
650 4 |a Economics  |x Economic disciplines  |x Financial economics  |x Finance  |x Financial management  |x Portfolio management 
650 4 |a Economics  |x Economic disciplines  |x Financial economics  |x Finance  |x Financial investments  |x Investors 
650 4 |a Economics  |x Economic disciplines  |x Financial economics  |x Finance  |x Financial management  |x Asset management 
650 4 |a Economics  |x Economic disciplines  |x Financial economics  |x Finance  |x Financial analysis  |x Risk management  |x Risk aversion 
650 4 |a Economics  |x Economic disciplines  |x Financial economics  |x Finance  |x Financial investments 
650 4 |a Law  |x Civil law  |x Contract law  |x Contracts  |x Financial contracts  |x Derivative contracts  |x Options contracts  |x Call options 
655 4 |a research-article 
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773 1 8 |g volume:39  |g year:1993  |g number:11  |g pages:1396-1406 
856 4 0 |u https://www.jstor.org/stable/2633033  |3 Volltext 
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952 |d 39  |j 1993  |e 11  |h 1396-1406