Career risk and market discipline in asset management

  • 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 results can be ascribed to reputation loss rather than bad luck. The findings suggest that performance-induced liquidations supplement compensation-based incentives.

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Metadaten
Author:Andrew Ellul, Marco Pagano, Annalisa Scognamiglio
URN:urn:nbn:de:hebis:30:3-473495
URL:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3274340
Parent Title (English):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 602
Series (Serial Number):CFS working paper series (602)
Publisher:Center for Financial Studies
Place of publication:Frankfurt, M.
Document Type:Working Paper
Language:English
Year of Completion:2018
Year of first Publication:2018
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2018/11/02
Tag:asset managers; hedge funds; market discipline; scarring effects
Issue:30 July 2018
Page Number:70
HeBIS-PPN:439736404
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Sammlungen:Universit├Ątspublikationen
Licence (German):License LogoDeutsches Urheberrecht