Audit contracts and reputation

This paper characterizes the contractual relationship between an external auditor and a manager of a client firm when the incentives for both agents are implicit as in the career concerns framework. The main result is that the earning management and the audit effort are decreasing over time because the incentives to build a reputation also decline for both agents in spite of a managers first mover advantage. This suggests that the audit effort should be higher when the auditor is an emerging firm and the future employment opportunities for the client firm?s manager are larger

Career concerns and investment maturity in mutual funds

An important puzzle in financial economics is why fund managers invest in short-maturity assets when they could obtain larger profits in assets with longer maturity. This work provides an explanation to this fact based on labor contracts signed between institutional investors and fund managers. Using a career concern setup, we examine how the optimal contract design, in the presence of both explicit and implicit incentives, affects the fund managers decisions on investment horizons. A numerical analysis characterizes situations in which young (old) managers prefer short-maturity (long-maturity) positions. However, when including multitask analysis, we find that career concerned managers are bolder and also prefer assets with long maturity

Two-sided career concern and financial equilibrium

This brief paper constructs a model of delegated portfolio management in which two agency relationships are characterized. First, a delegation process from investors to fund companies, and second, a delegation from fund companies to fund managers. Career concerns of both agents lead to a churning equilibrium in which uninformed managers trade noisily, and uninformed fund companies are willing to hire these uninformed managers. This equilibrium delivers non-fully informative prices and a positive and high trading volume. Our model then strengths previous explanations to the trade puzzle, predicting an increasing trade activity as long as institutional investors with intense delegation play an increasing role in financial markets

Challenging media (mis)representation: an exploration of available models

This article is a theoretical analysis aimed at articulating the harm caused by media (mis)representation, and at showing existing ways in which this harm can be contested. The approaches analysed are largely from the United Kingdom. However, the issues they raise are not unique and the models explored are potentially transferable. The examples cover a range of media, including British right-wing press, television and Facebook; and characteristics protected by equality legislation in the UK such as sex, sexual orientation, race, religion and mental health stigma. Crucially, all the initiatives presented demonstrate the group-based nature of media (mis)representations, which cannot be understood and, therefore, cannot be addressed through individualistic approaches. Therefore, the article concludes that the role of groups as the targets of media (mis)representation and as potential claimants should be fully acknowledged and enabled

Career concerns and investment maturity in mutual funds

An important puzzle in financial economics is why fund managers invest in short-maturity assets when they could obtain larger profits in assets with longer maturity. This work provides an explanation to this fact based on labor contracts signed between institutional investors and fund managers. Using a career concern setup, we examine how the optimal contract design, in the presence of both explicit and implicit incentives, affects the fund managers decisions on investment horizons. A numerical analysis characterizes situations in which young (old) managers prefer short-maturity (long-maturity) positions. However, when including multitask analysis, we find that career concerned managers are bolder and also prefer assets with long maturity.Contract theory, Career concerns, Financial equilibrium, Investment maturity

Audit contracts and reputation

This paper characterizes the contractual relationship between an external auditor and a manager of a client firm when the incentives for both agents are implicit as in the career concerns framework. The main result is that the earning management and the audit effort are decreasing over time because the incentives to build a reputation also decline for both agents in spite of a managers first mover advantage. This suggests that the audit effort should be higher when the auditor is an emerging firm and the future employment opportunities for the client firm´s manager are larger.Contract theory, Career concerns, Reputation, Auditing

Two-sided career concern and financial equilibrium

This brief paper constructs a model of delegated portfolio management in which two agency relationships are characterized. First, a delegation process from investors to fund companies, and second, a delegation from fund companies to fund managers. Career concerns of both agents lead to a churning equilibrium in which uninformed managers trade noisily, and uninformed fund companies are willing to hire these uninformed managers. This equilibrium delivers non-fully informative prices and a positive and high trading volume. Our model then strengths previous explanations to the trade puzzle, predicting an increasing trade activity as long as institutional investors with intense delegation play an increasing role in financial markets.Career concern, Financial equilibrium, Trade puzzle