We propose a model of delegated portfolio management with career concerns. Investors hire fund managers to invest their … capital either in risky bonds or in riskless assets. Some managers have superior information on the default risk. Looking at … the past performance, investors update beliefs on their managers and make firing decisions. This leads to career concerns …

We propose a model where investors hire fund managers to invest either in risky bonds or in riskless assets. Some … managers have superior information on the default probability. Looking at the past performance, investors update beliefs on … their managers and make firing decisions. This leads to career concerns which affect investment decisions, generating a …