Incentives for Distorted Market Research

How do incentives distort research on financial markets, and how do incentivized researchers introduce the distortions? In his April 2022 paper entitled “The Pitfalls of Asset Management Research”, Campbell Harvey explores how economic incentives affect findings in both academic and practitioner research on financial markets, including evidence of distortion. Based on his 35 years as an academic, advisor to asset management companies and editor of a top academic finance journal, he concludes that: (more…)