Reputation Concerns and Slow-Moving Capital

41 Pages Posted: 30 Oct 2008 Last revised: 24 Mar 2021

See all articles by Steven G. Malliaris

Steven G. Malliaris

University of Georgia - Department of Banking and Finance

Hongjun Yan

DePaul University

Date Written: March 24, 2021


We analyze fund managers' reputation concerns in an equilibrium model, tying together a number of seemingly unrelated phenomena. The model implies that, due to reputation concerns, hedge fund managers --- especially those with average reputation levels --- prefer strategies with negatively skewed return distributions. One subtle consequence of this preference is that capital sometimes appears slow moving, leaving profitable investment opportunities unexploited, yet other times appears fast moving, causing large capital relocation and price fluctuations in the absence of fundamental news. More broadly, the analysis demonstrates a limitation of market discipline: fund managers may distort their investments precisely because of market discipline.

Keywords: Reputation, Slow-moving capital, Career concern

JEL Classification: G11, G23

Suggested Citation

Malliaris, Steven G. and Yan, Hongjun, Reputation Concerns and Slow-Moving Capital (March 24, 2021). AFA 2011 Denver Meetings Paper, Yale ICF Working Paper No. 08-26, Available at SSRN: or

Steven G. Malliaris

University of Georgia - Department of Banking and Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States

Hongjun Yan (Contact Author)

DePaul University ( email )

1 East Jackson Blvd.
Chicago, IL 60604
United States


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