Pay-performance Sensitivity and Firm Size: Insights From the Mutual Fund Industry

I examine the ex ante decision to make an agent\u27s pay-performance sensitivity an inverse function of organization size. I focus on mutual funds and their decision to use compensation contracts that reduce the advisor\u27s marginal compensation as the fund grows (a declining-rate contract) over the dominant contract type, where marginal compensation is unrelated to fund size (a single-rate contract). I find evidence consistent with the view that declining-rate contracts are a mechanism to keep marginal compensation in line with the advisor\u27s declining marginal product. Specifically, I find that funds with greater exposure to diseconomies of scale are more likely to use a declining-rate contract and to specify a greater amount of compensation decline in their contracts. Consistent with optimal contracting, I find no evidence of a performance difference between funds with declining-rate contracts and funds with single-rate contracts

Convenience in the mutual fund industry

Abstract I examine the role of convenience in the mutual fund industry. I find that investors pay more for relatively convenient funds, and that the flows to convenient funds are less responsive to performance. These findings suggest that investors do not evaluate mutual funds independently, but rather that investors select a primary fund, likely based on beliefs about managerial ability, and then select funds which are relatively convenient to this primary fund. Highlights ► I find that investors pay a significant premium to invest in convenient mutual funds. ► I find that the flows to convenient funds are indifferent to fund performance. ► These results demonstrate the importance of convenience to mutual fund investors. ► They suggest that investors choose a primary fund and then funds that are convenient

Metallic composites as high-temperature fasteners

Metallic composities can be fabricated in one-step process in which mixture is directionally solidified. Phase-reinforced eutectic alloys have superior high-temperature mechanical properties