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Investment Management and Risk Sharing with Multiple Managers
Author(s) -
BARRY CHRISTOPHER B.,
STARKS LAURA T.
Publication year - 1984
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1984.tb02321.x
Subject(s) - diversification (marketing strategy) , business , investment (military) , investment management , risk management , finance , actuarial science , risk analysis (engineering) , marketing , politics , political science , market liquidity , law
This paper addresses the investor's decision to employ multiple managers for the management of investment funds. Under conditions such that specialization of managers and diversification among managers are not motives for the use of multiple managers, the paper shows that risk sharing considerations may be sufficient. A model is developed in which the decision to use multiple managers is explicitly treated, and conditions are studied such that an increase or decrease in the number of managers would be desirable. Under some conditions, a multiple manager solution is preferred over a single manager solution.