Our evidence that some investors respond immediately to monthly rating changes and that the response continues for seven months implies that the tournament for investor flow more likely operates on an ongoing basis, rather than at the annual frequencies assumed in previous studies. Moreover, in an unreported test we find no economically significant difference in the flow response for performance changes that occur at year-end. These findings suggest that more work in<br>the theoretical modeling of managerial behavior that better captures the dynamic and repeated game aspects of the tournament may be fruitful. A theoretical model of managerial incentives in such an environment could point the way toward new empirical tests of strategic managerial behavior.
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