The Research On The Incentive Mechanism Of Fund Managers In Chinese Security Investment Funds

Fund managers are the key persons in the operation of an investment fund, who have a great impact on fund performance. But recently,"herd behavior"and"black screen"take place frequently in the fund industry in China that indicates the loose systems of balance constrain and supervision. Therefore, it is very important to apply incentive mechanism to protect the interest of stakeholders and avoid"reversion choice"and"moral risk"among fund managers. We choose the incentive mechanism of fund managers as our research subject, which has some great theoretical and practical significance.Firstly, we carry on the theoretical analysis to the absolute performance incentive contract and the relative performance incentive contract. From the fund managers'level of effort can be observed and can not be observed by the fund investors in both cases, we discover that when the fund investors cannot observe the fund managers'level of effort, the fund managers must undertake certain risk, and thus have the proxy cost. Secondly, we utilize the multi-dimensional linear regression models to study the incentive effect of fund management fee. We discover that the fund management fee which rose by the fixed fund management tariff is weak to the fund performance. Moreover, the fund managers want to obtain more management fees, they like to expand the fund scale and enhance the fund risk. Thirdly, we have analyzed the professional prestige about the fund managers'incentive effect using the Logistic regression models by establishing 0, 1 two classified variables. And finally, we study the fund managers'risk choice by the relative performance sorting. We discover that the fund managers will adjust the risk of portfolio according to the relative performance sorting.According to the conclusions of theoretical and empirical analysis, we put forward the design and the consummation plans about the incentive mechanism of fund managers, and we bring forward some suggestion to safeguard fund managers'incentive mechanism to display useful effect from three aspects.