Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/177385 
Year of Publication: 
2018
Series/Report no.: 
CFR Working Paper No. 18-01
Publisher: 
University of Cologne, Centre for Financial Research (CFR), Cologne
Abstract: 
This paper examines how labor mobility restrictions such as non-compete clauses in employment contracts affect the incentives and resulting behavior of employees. Using the investment industry as a testing laboratory, we find that mutual fund managers respond to heightened career concerns due to increased enforceability of non-compete clauses by increasing effort, reducing downside risk, engaging less in tournaments, making their portfolios similar to the portfolios of their benchmarks or peers, and increasing window-dressing. These concerns are, however, moderated by the presence of more developed internal labor markets, which allow managers to substitute restricted across-family mobility with within-family mobility.
Document Type: 
Working Paper

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