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Managerial Ability, Compensation, and the Closed‐End Fund Discount
Author(s) -
BERK JONATHAN B.,
STANTON RICHARD
Publication year - 2007
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.1540-6261.2007.01216.x
Subject(s) - compensation (psychology) , closed end fund , business , economics , actuarial science , finance , psychology , psychoanalysis , market liquidity
This paper shows that the existence of managerial ability, combined with the labor contract prevalent in the industry, implies that the closed‐end fund discount should exhibit many of the primary features documented in the literature. We evaluate the model's ability to match the quantitative features of the data, and find that it does well, although there is some observed behavior that remains to be explained.