Asset delegation, career concerns and trade volume

The paper analyzes the e¤ects 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