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Conflicts of Interest in Asset Management and Advising

Authors
  • Spatt, Chester S.
Type
Published Article
Publisher
Annual Reviews
Publication Date
Nov 01, 2020
Volume
12
Pages
217–235
Identifiers
DOI: 10.1146/annurev-financial-110118-123113
Source
Annual Reviews
Keywords
License
Yellow

Abstract

This review addresses, from a unified perspective, the important role of conflicts of interest in various facets of asset management and advising, including managing individual portfolios, institutional asset management, and order routing. I use an agency framework to highlight the sources of the underlying incentive conflicts, the nature of efficient solutions, the role of the structure of compensation in mitigating (or creating) the agency problem, and the use of benchmarks as a solution. I also highlight several contemporary contexts in which conflicts of interest are important.

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