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Career Concerns of Mutual Fund Managers

47 Pages Posted: 7 Oct 1998  

Judith A. Chevalier

Yale School of Management; National Bureau of Economic Research (NBER)

Glenn Ellison

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: August 1998

Abstract

We examine the labor market for mutual fund managers. Using data from 1992-1994, we find that "termination" is more performance-sensitive for younger managers. We identify possible implicit incentives created by the termination-performance relationship. The shape of the termination-performance relationship may give younger managers an incentive to avoid unsystematic risk. Direct effects of portfolio composition may also give younger managers an incentive to "herd" into popular sectors. Consistent with these incentives, we find that younger managers hold less unsystematic risk and have more conventional portfolios. Promotion incentives and market responses to managerial turnover are also studied.

JEL Classification: G3, J4, L8

Suggested Citation

Chevalier, Judith A. and Ellison, Glenn, Career Concerns of Mutual Fund Managers (August 1998). Available at SSRN: https://ssrn.com/abstract=130990 or http://dx.doi.org/10.2139/ssrn.130990

Judith A. Chevalier (Contact Author)

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Glenn David Ellison

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-380B
Cambridge, MA 02142
United States
617-253-8702 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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