Does customer-base structure influence managerial risk-taking incentives?

• 成果类型: Article
• 署名作者: Chen, Jie; Su, Xunhua; Tian, Xuan; Xu, Bin
• 署名单位: University of Leeds; Norwegian School of Economics (NHH); Tsinghua University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2021.07.015
• 发表日期: 2022
• 页码: 462-483
• 关键词: Executive compensation; Risk-taking incentives; corporate governance; Customer concentration; Product market relationships

摘要

We find strong evidence that when a firm's customer base is more concentrated, the firm's CEO receives more risk-taking incentives in her compensation package. This finding is robust to numerous alternative measures, alternative specifications, alternative subsamples, and different attem pts that mitigate endogeneity concerns. Further, the positive effect of customer concentration on CEO risk-taking incentive provision is more prominent when the CEO is more reluctant to take risks, when the firm has more investment opportunities, and when the firm is more prone to the costs of losing large customers. These findings are consistent with the notion that boards provide additional risk-taking incentives to offset the CEO's aversion to the risk of non-diversified revenue streams, thereby preventing excessive managerial conservatism at the expense of value maximization. (c) 2021 Elsevier B.V. All rights reserved.