The Department of Finance is pleased to announce that for the second year running Dr Ulf Axelson has been awarded the Brattle Group Distinguished Paper Prize. The announcement came at the annual meeting of the AFA, in San Francisco. Dr Axelson’s paper, "Wall Street Occupations", was co-authored with Philip Bond (Foster School of Business), and published in the prestigious Journal of Finance in October 2015.
Associate editors of the Journal of Finance annually select the three best papers in the field of corporate finance from those published in the Journal during the previous year. This is the third time Ulf’s work has been recognised in recent years, while current LSE faculty members have now been recognised for eight years in a row, highlighting the Department’s position as a world-leading centre for research in the field of corporate finance.
About the paper:
Distinguished Paper: Ulf Axelson and Philip Bond
"Wall Street Occupations," The Journal of Finance, October 2015.
Abstract:
Many finance jobs entail the risk of large losses, and hard-to-monitor effort. We analyze the equilibrium consequences of these features in a model with optimal dynamic contracting. We show that finance jobs feature high compensation, up-or-out promotion, and long work hours, and are more attractive than other jobs. Moral hazard problems are exacerbated in booms, even though pay increases. Employees whose talent would be more valuable elsewhere can be lured into finance jobs, while the most talented employees might be unable to land these jobs because they are “too hard to manage.”