Title：Stay to Behave: Mortgage Lock-In and Advisor Misconduct

Speaker: Michael Shen, Assistant Professor, City University of Hong Kong

Time：10:00-11:30, Nov 4th, 2026 (Wednesday)

Venue：Room 706, Mingde Business Building (Zhongguancun Campus)

Language：Chinese & English

ABSTRACT:

Geographic mobility can weaken reputational discipline by allowing financial advisors to escape local consequences of misconduct. We examine whether mortgage lock-in, which raises the cost of relocating when prevailing mortgage rates exceed existing mortgage rates, strengthens reputational incentives. Linking 2.39 million advisor-years of FINRA records to credit-bureau mortgage data, we instrument for household immobility using the gap between current and origination mortgage prime rates. We find that a one-percentage-point increase in predicted immobility reduces misconduct by 0.055 percentage points, or about 12% of the sample mean. Mobility constraints also affect how advisors respond to existing customer disputes. Advisors facing greater constraints are less likely to allow disputes to escalate, make larger settlement payments, and are more likely to expunge their disciplinary records from the public domain, despite facing similar allegations at filing. Our results suggest that geographic mobility shapes both incentives to avoid misconduct and efforts to manage reputational damage once allegations arise.