EconPapers    
Economics at your fingertips  
 

Career Risk and Market Discipline in Asset Management

Andrew Ellul, Marco Pagano () and Annalisa Scognamiglio ()
Additional contact information
Andrew Ellul: Indiana University

No 1715, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)

Abstract: We establish that the labor market helps discipline asset managers via the impact of fund liquidations on their careers. Using hand-collected data on 1,948 professionals, we find that top managers working for funds liquidated after persistently poor relative performance suffer demotion coupled with a significant loss in imputed compensation. Scarring effects are absent when liquidations are preceded by normal relative performance or involve mid-level employees. Seen through the lens of a model with moral hazard and adverse selection, these scarring effects can be ascribed to a drop in asset managers’ reputation. The findings suggest that performance-induced liquidations supplement compensation-based incentives.

Date: 2017, Revised 2019-02
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.eief.it/eief/images/WP_17.15.pdf (application/pdf)

Related works:
Working Paper: Career Risk and Market Discipline in Asset Management (2019) Downloads
Working Paper: Career Risk and Market Discipline in Asset Management (2018) Downloads
Working Paper: Career risk and market discipline in asset management (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eie:wpaper:1715

Access Statistics for this paper

More papers in EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF) Contact information at EDIRC.
Bibliographic data for series maintained by Facundo Piguillem ().

 
Page updated 2019-04-08
Handle: RePEc:eie:wpaper:1715