Abstract
This paper extends the career concerns literature by showing how career concerns can lead to managerial turnover. A model of turnover based on team production and asymmetric information is constructed. Team production makes it difficult, if not impossible, for market participants to learn a manager's individual ability level. Turnover provides an opportunity to further learn managerial ability. As such, high ability managers signal their ability levels by engaging in turnover. The probability of managerial turnover is shown to be decreasing in the cost of turnover, increasing in the variance of firms' perceived abilities, and increasing in the variance of a manager's perceived ability. The predictions of the model are supported by recent empirical work on managerial turnover.
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