Managerial incentives and risk-taking

• 成果类型: Article
• 署名作者: Coles, JL; Daniel, ND; Naveen, L
• 署名单位: Arizona State University; Arizona State University-Tempe; University System of Georgia; Georgia State University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2004.09.004
• 发表日期: 2006
• 页码: 431-468
• 关键词: Executive compensation; managerial incentives; risk taking; investment policy; Financing policy

摘要

We provide empirical evidence of a strong causal relation between managerial compensation and investment policy, debt policy, and firm risk. Controlling for CEO pay-performance sensitivity (delta) and the feedback effects of firm policy and risk on the managerial compensation scheme, we find that higher sensitivity of CEO wealth to stock volatility (vega) implements riskier policy choices, including relatively more investment in R&D, less investment in PPE, more focus, and higher leverage. We also find that riskier policy choices generally lead to compensation structures with higher vega and lower delta. Stock-return volatility has a positive effect on both vega and delta. (c) 2005 Elsevier B.V. All rights reserved.