Massimo Scotti
580 California St., Suite 400
San Francisco, CA, 94104
Asset Delegation, Career Concerns and Trade Volume
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Abstract
The paper analyzes the eects of career concerns of portfolio managers on their incentives to trade in a order-driven market. We show that career concerns lead portfolio managers to trade even whithout valuable informa- tion, and hence even when they expect a negative return from trading. We then analyze how managers reacts to changes in asset volatility and …nd that uninformed managers facing career concerns trade larger quantities as asset riskiness increases. As a testable empirical implication, the model predicts that increasing levels of institutional ownership in …nancial markets lead to higher trading volumes that are positively correlated with asset volatility.
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ii Declaration By submitting this thesis/dissertation, I declare that the entirety of the work contained therein is my own, original work, that I am the sole author thereof (save to the extent explicitly otherwise stated), that reproduction and publication thereof by Stellenbosch University will not infringe any third party rights and that I have not previously in its entirety or in part submitted it for obtaining any qualification.
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