Asymmetry of Reputation Loss and Recovery under Endogenous Relationships: Theory and Evidence∗

نویسندگان

  • Takako Fujiwara-Greve
  • Henrich R. Greve
چکیده

We formulate a dynamic investment model where investors can easily change firms (funds) and firms’ actions are subject to imperfect monitoring. We show that there is an asymmetry of fast customer loss and slow recovery, without learning or asymmetry in feasible actions at different states. The key factor is endogenous relationships. It is easy to lose customers but it is not easy to get them back, because without an ongoing relationship, investors care more about the currently owned funds. In a mutual fund market, we give empirical evidence, at an individual firm level, that asymmetry of investor movements exists when all fund managers have similar performance but one fund manager was associated with a bad news.

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تاریخ انتشار 2010