empirical investigation of the risk taking behavior of mutual fund managers indicates that managerial risk taking crucially …, fund managers with a poor midyear performance tend to decrease risk relative to leading managers to prevent potential job … loss. When employment risk is low, compensation incentives become more relevant and fund managers with a poor midyear …

We derive equilibrium asset prices when fund managers deviate from benchmark indices to exploit noise-trader induced … distortions but fund investors constrain these deviations. Because constraints force managers to buy assets that they underweight …. Noise traders bias prices upward because constraints make it harder for managers to underweight overvalued assets, which …

We derive equilibrium asset prices when fund managers deviate from benchmark indices to exploit noise-trader induced … distortions but fund investors constrain these deviations. Because constraints force managers to buy assets that they underweight …. Noise traders bias prices upward because constraints make it harder for managers to underweight overvalued assets, which …

corroborate these findings to reveal more pronounced effects when fund managers have stronger career incentives and are less …