Seeking Alpha - Excess Risk Taking and Competition for Managerial Talent

Viral Acharya, Marco Pagano and Paolo Volpin

No 1303, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)

Abstract: We present a model where firms compete for scarce managerial talent ("alpha") and managers are risk-averse. When managers cannot move across firms after being hired, employers learn about their talent, allocate them efficiently to projects and provide insurance to low-quality managers. When instead managers can move across firms, firm-level coinsurance is no longer feasible, but managers may self-insure by switching employer to delay the revelation of their true quality. However this results in inefficient project assignment, with low- quality managers handling projects that are too risky for them. (JEL D62,G32, G38, J33)

Pages: 51 pages
Date: 2013, Revised 2016-04
New Economics Papers: this item is included in nep-bec, nep-cta, nep-hrm and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (47)

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Related works:
Journal Article: Seeking Alpha: Excess Risk Taking and Competition for Managerial Talent (2016)
Working Paper: Seeking Alpha: Excess Risk Taking and Competition for Managerial Talent (2016)
Working Paper: Seeking Alpha: Excess Risk Taking and Competition for Managerial Talent (2013)
Working Paper: Seeking Alpha: Excess Risk Taking and Competition for Managerial Talent (2012)
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