arXiv subjects

Jun Honda

Publications and source records attributed to Jun Honda.

3 recordsLinked to original sources

arXiv2025

Career Incentives, Risk-Taking, and Sorting Dynamics: Evidence from Top Financial Advisers

We examine how career concerns influence the behavior and mobility of financial advisers. Drawing on a uniquely comprehensive matched panel that combines employer-employee data with a longstanding national ranking, our study tests predictions from classic career concerns models and tournament theory. Our analysis shows that, in the early stages of their careers, advisers destined for top performance differ significantly from their peers. Specifically, before being ranked, these advisers are twice as likely to obtain a key investment license, experience customer disputes at rates up to seven times higher, and transition to firms with 80% larger total assets. Moreover, we find that top advisers mitigate the potential costs of their higher risk-taking by facing reduced labor market penalties following disciplinary actions. Leveraging exogenous variation from the staggered adoption of the Broker Protocol through an event-study framework, our results reveal dynamic sorting: firms attract high-performing advisers intensely within a short post-adoption period. These findings shed new light on the interplay between career incentives, risk-taking, and labor market outcomes in the financial services industry, with important implications for both firm performance and regulatory policy.

econ.GN↗

arXiv2025

Hiding in Good Times, Caught in Bad: Strategic Masking and the Delayed Detection of Financial Adviser Misconduct

While financial misconduct in advisory services persists despite regulation, the demand-side of market discipline, specifically the timing of investor detection, remains a critical bottleneck. Using approximately 55,700 FINRA BrokerCheck records, we analyze the detection lag between misconduct inception and formal reporting. We document a conditional average lag of 28.5 months, with a fat-tail exceeding eight years. Overt unauthorized activity reduces the lag by 35.7%, whereas sophisticated fraud extends it by 58.6%. Using method of moments quantile regression, we reveal a strategic masking gradient: the impact of advisor experience more than doubles at the 90th percentile relative to the 10th. Product opacity acts as an expanding shield: insurance-linked disputes extend latency by by 61.9% at the 10th percentile and by 90.0% at the 90th percentile of the distribution. Finally, market volatility serves as an asymmetric catalyst for discovery: a doubling of the VIX reduces the lag by 21.1% for rapid-discovery cases, but only 7.9% for deeply concealed schemes. These strategically managed discovery delays allow bad types to persist across multiple market cycles.

econ.GN↗

arXiv2025

Financial Adviser Misconduct and Labor Market Penalties: Uncovering Racial Disparities in the Absence of Gender Gaps

Using a comprehensive matched employer-employee dataset for U.S. financial advisers from 2008 to 2018, we revisit established evidence on labor market penalties following financial misconduct. Prior studies report that female advisers are 20% more likely to exit their firms following misconduct and that similar disparities exist for non-white advisers. However, by disaggregating misconduct into distinct disclosure events - differentiating those that nearly always trigger job terminations from those that do not - we show that the apparent gender gap vanishes, while significant racial disparities persist. Specifically, non-white advisers face approximately 24% higher job separation rates than their white counterparts. Robustness checks confirm these findings across alternative specifications, suggesting that race-based differential treatment in the labor market is a distinct phenomenon warranting further investigation.

econ.GN↗