Talent Discovery and Poaching under Asymmetric Information

58 Pages Posted: 2 Mar 2015 Last revised: 22 Jun 2022

See all articles by Daniel Ferreira

Daniel Ferreira

London School of Economics - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Radoslawa Nikolowa

Queen Mary, University of London

Multiple version iconThere are 2 versions of this paper

Date Written: July 14, 2020

Abstract

We develop a model of the market for knowledge workers in which talent is discovered on the job. In the model, asymmetric information and firm-specific human capital combine to generate several predictions relating firm heterogeneity to talent discovery and poaching. We show that high-quality (i.e., large and high-productivity) firms are more likely to become talent poachers, while lower quality firms are more likely to invest in talent discovery. Job-to-job flows are adversely selected, which implies that internally promoted managers are more productive than those who are externally promoted. The model generates several additional predictions linking firm heterogeneity
to the distribution of managerial talent, productivity, compensation, and promotions.

Keywords: Adverse Selection, Poaching, Talent Discovery

JEL Classification: G30, J62

Suggested Citation

Ferreira, Daniel and Nikolowa, Radoslawa, Talent Discovery and Poaching under Asymmetric Information (July 14, 2020). European Corporate Governance Institute - Finance Working Paper No. 621/2019, Available at SSRN: https://ssrn.com/abstract=2572036 or http://dx.doi.org/10.2139/ssrn.2572036

Daniel Ferreira (Contact Author)

London School of Economics - Department of Finance ( email )

Houghton Street
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(+44) 20 7955 7544 (Phone)

HOME PAGE: http://personal.lse.ac.uk/FERREIRD/

European Corporate Governance Institute (ECGI)

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Belgium

HOME PAGE: http://www.ecgi.org

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Radoslawa Nikolowa

Queen Mary, University of London ( email )

Mile End Rd.
London, E1 4NS
United Kingdom

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