The portability of star knowledge workers: Evidence from the analyst market

In three related papers, this thesis examines the security analyst's labor market to understand the workers' mobility and the portability of their performance. In Essay 1, I find 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. Stars who switch to higher-rated firms (upward movement) and stars who change firms with their team members show no significant decline in short-term or long-term performance. If skill specificity exists for one of the most likely professions to qualify for the free agent status, then it is likely to be present for many others. Moreover, the findings suggest that hiring of star analysts is seen by the stock market as value-destroying for the hiring firms.;Extending the previous research in sociology and labor economics, essay 2 examines the determinants of star analysts' performance. First, star analysts' firm tenure, diversity of prior experience, sector coverage, as well as the characteristics of their work environment, such as the quality of coworkers, the quality of portfolio strategists, and the quality of the firm's institutional sales force, influence their performance. Second, I find that stars departing from better organizations experiencing bigger decline. Finally, the findings suggest that the quality of the organization matters less as tenure increases.;Essay 3, joint with Ashish Nanda, finds that, in aggregate, star analysts have lower turnover than non-stars. This is due, however, not to their stardom, but to demographic characteristics; stars tend to be older, more experienced, and have moved less than non-stars. Established stars are less likely than new stars to switch jobs. These results suggest that firm specificity of skills drives down established stars', and greater external recognition drives up newly ranked stars', turnover to competitors. We also find drivers of analyst turnover to vary by destination.