”Can They Take it With Them? The Portability of Star Knowledge Workers' Performance: Myth or Reality?”

This paper examines the portability of star security analysts’ performance. Analysis from a panel data set of research analysts in investment banks over 1988-1996 reveals that star analysts who switch employers show an immediate decline in performance, which persists for at least five years. This decline in performance is most pronounced for star analysts who move to lower-rated firms (downward movement) and star analysts who move without other members of their team (solo). Star analysts who move between two similar firms (lateral movement) also exhibit a drop in their performance but only for two years. These findings suggest the value of firm-specific and team-specific skills, as well as the impact of firms’ capabilities on star analysts’ performance. In fact, if skill specificity exists for one of the most likely professions to qualify for the free agent status (star security analysts), then it is likely to be present for many others. The extent to which the analysts’ skills are firm-specific, and therefore a source of competitive advantage, varies across firms. Moreover, the findings suggest that investors do not view the announcement of star analyst departures as value-enhancing or value-reducing for the exiting firms.