TY  - JOUR
AU  - Guerrieri,Veronica
AU  - Kondor,Péter
TI  - Fund Managers, Career Concerns, and Asset Price Volatility
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14898
PY  - 2009
Y2  - April 2009
UR  - http://www.nber.org/papers/w14898
L1  - http://www.nber.org/papers/w14898.pdf
N1  - Author contact info:
Veronica Guerrieri
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-7834
Fax: 773/702-0458
E-Mail: vguerrie@chicagobooth.edu

Peter Kondor
Central European University
Department of Economics
Nador u. 9.
Budapest, H-1051
Hungary
Tel: 773/702-8453
Fax: 773/702-0458
E-Mail: kondorp@ceu.hu
AB  - 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.
ER  -