While you’re here… help us stay here.

As we confront the economic impacts of the pandemic, we need your support even more. So that we can continue to bring you the latest in policy and research, please donate to APO.

Working paper
Attachment Size
apo-nid66482.pdf 361.9 KB

The agency problems that pervade delegated investment management are exacerbated when investing for the long term, where the payoff is distant and often highly uncertain. These conditions compound the difficulty of aligning and monitoring the agents (managers) responsible for making investment decisions, particularly across multi-layered investment organizations. Problems arise from differences in investment horizons; the tendency to evaluate and reward based on short-term results; and failure to commit. We delve into these issues, and offer some solutions. Investment organizations intending to pursue long-term investing should aim to create an environment where all principals and agents along the chain of delegations are aligned, engaged on an ongoing basis, incentivized to work towards long-term outcomes, and committed to investing for the long run.

Publication Details


Access Rights Type: