Career concerns of mutual fund managers

We examine the labor market for mutual fund managers. Using data from 1992- 1994, we find that "termination'' is more performance-sensitive for younger managers. We identify possible implicit incentives created by the terminat ion-performance relationship. The shape of the termination-performance rela tionship may give younger managers an incentive to avoid unsystematic risk. Direct effects of portfolio composition may also give younger managers an incentive to "herd'' into popular sectors. Consistent with these incentives , we find that younger managers hold less unsystematic risk and have more c onventional portfolios. Promotion incentives and market responses to manage rial turnover are also studied.