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- Title
Seeking Alpha: Excess Risk Taking and Competition for Managerial Talent.
- Authors
Acharya, Viral; Pagano, Marco; Volpin, Paolo
- Abstract
We present a model in which firms compete for scarce managerial talent ("alpha") and managers are risk averse. When managers cannot move across firms after being hired, employers learn about their talent, efficiently allocate them to projects, and provide insurance to low-quality managers. When, instead, managers can move across firms, firmlevel coinsurance is no longer feasible, but managers may self-insure by switching employer to delay the revelation of their true quality. However, this results in inefficient project assignment, with low-quality managers handling projects that are too risky for them.
- Subjects
TALENT management; RISK-taking behavior; PROJECT managers; RISK aversion; EXECUTIVE recruiting; INVESTMENT banking personnel; COINSURANCE; RISK assessment in project management; MATHEMATICAL models; EMPLOYMENT
- Publication
Review of Financial Studies, 2016, Vol 29, Issue 10, p2565
- ISSN
0893-9454
- Publication type
Article
- DOI
10.1093/rfs/hhw036