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Fund Managers, Career Concerns, and Asset Price Volatility / Veronica Guerrieri, Péter Kondor.
- Format:
- Book
- Author/Creator:
- Guerrieri, Veronica.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w14898.
- NBER working paper series no. w14898
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2009.
- Summary:
- We propose a model where investors hire fund managers to invest either in risky bonds or in riskless assets. Some managers have superior information on the default probability. Looking at the past performance, investors update beliefs on their managers and make firing decisions. This leads to career concerns which affect investment decisions, generating a positive or negative "reputational premium". For example, when the default probability is high, uninformed managers prefer to invest in riskless assets to reduce the probability of being fired. As the economic and financial conditions change, the reputational premium amplifies the reaction of prices and capital flows.
- Notes:
- Print version record
- April 2009.
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