Martin Holmen

article

Convex incentives in financial markets: an agent-based analysis

Annalisa Fabretti, Tommy Gärling, Stefano Herzel, Martin Holmen

Decisions in Economics and Finance > 2017 > 40 > 1-2 > 375-395

We investigate whether convex incentive contracts are a source of instability of financial markets as indicated by the results of a continuous double-auction asset market experiment performed by Holmen et al. (J Econ Dyn Control 40:179–194, 2014). We develop a model to replicate the setting of the experiment and perform an agent-based simulation where agents have linear or convex incentives. Extending...

article

How tournament incentives affect asset markets: A comparison between winner-take-all tournaments and elimination contests

Dawei Fang, Martin Holmén, Daniel Kleinlercher, Michael Kirchler

Journal of Economic Dynamics and Control > 2017 > 75 > C > 1-27

We investigate the impact of investment managers׳ tournament incentives on investment strategies and market efficiency, distinguishing between winner-take-all tournaments (WTA), where a minority wins, and elimination contests (EC), where a majority wins. Theoretically, we show that investment managers play heterogeneous strategies in WTA and homogeneous strategies in EC, and markets are more prone...

article

Charity, incentives, and performance

Oege Dijk, Martin Holmén

Journal of Behavioral and Experimental Economics > 2017 > 66 > C > 119-128

We propose that donating profits to charity may improve firm performance through reduced moral hazard and increased effort in incomplete contract environments. This proposition is tested and confirmed in an incomplete contract principal-agent laboratory experiment where principals’ profits are donated to charity. The results show that both principals and agents have higher earnings in treatments where...

article

Do option-like incentives induce overvaluation? Evidence from experimental asset markets

Martin Holmen, Michael Kirchler, Daniel Kleinlercher

Journal of Economic Dynamics and Control > 2014 > 40 > Complete > 179-194

One potential reason for bubbles evolving prior to the financial crisis was excessive risk taking stemming from option-like incentive schemes in financial institutions. By running laboratory asset markets, we investigate the impact of option-like incentives on price formation and trading behavior. The main results are that (i) we observe significantly higher market prices with option-like incentives...

article

Rank matters–The impact of social competition on portfolio choice

Oege Dijk, Martin Holmen, Michael Kirchler

European Economic Review > 2014 > 66 > Complete > 97-110

Tournament incentives’ schemes have been criticized for inducing excessive risk-taking among financial market participants. In this paper we investigate how relative performance-based incentive schemes and status concerns for higher rank influence portfolio choice in laboratory experiments. We find that both underperformers and over-performers adapt their portfolios to their current relative performance,...

article

Tender Offers versus Block Trades: Empirical Evidence

Martin Holmén, Eugene Nivorozhkin

Managerial and Decision Economics > 33 > 7-8 > 511 - 529

In this paper, we test whether the determinants of block trade and non‐partial tender offer probabilities differ and whether the relative magnitude of security and private benefits can explain the choice of transfer mode. We investigate the Swedish market for corporate control. The results emphasize the importance of investigating block trades and tender offers as two competing events. The proxies...

article

Inside shareholders’ effective tax rates and dividends

Martin Holmen, John D. Knopf, Stefan Peterson

Journal of Banking and Finance > 2008 > 32 > 9 > 1860-1869

Using information collected from the Swedish tax authorities, we calculate insiders’ actual effective tax rates on dividends. With this unique dataset, we find a significant negative cross-sectional relationship between insiders’ effective tax rates and dividend payout. This result is consistent with a tax-induced clientele effect for dividends. We also look at the impact of large block trades on...

article

Family ownership, dual-class shares, and risk management

Niclas Hagelin, Martin Holmén, Bengt Pramborg

Global Finance Journal > 2006 > 16 > 3 > 283-301

We investigate whether the use of dual-class shares affects the financial policy of Swedish public corporations. Specifically, we distinguish between firms that are controlled by owners with poor portfolio diversification (families) and those controlled by owners with diversified portfolios (institutions). We find that, on average, family-controlled firms do not rely on less debt, more corporate diversification,...

INFONA - science communication portal

Search results for: Martin Holmen

Convex incentives in financial markets: an agent-based analysis

How tournament incentives affect asset markets: A comparison between winner-take-all tournaments and elimination contests

Charity, incentives, and performance

Do option-like incentives induce overvaluation? Evidence from experimental asset markets

Rank matters–The impact of social competition on portfolio choice

Tender Offers versus Block Trades: Empirical Evidence

Inside shareholders’ effective tax rates and dividends

Family ownership, dual-class shares, and risk management

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INFONA - science communication portal

Search results for: Martin Holmen

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