A DUAL AGENCY VIEW OF BOARD COMPENSATION: THE JOINT EFFECTS OF OUTSIDE DIRECTOR AND CEO STOCK OPTIONS ON FIRM RISK

• 成果类型: Article
• 署名作者: Deutsch, Yuval; Keil, Thomas; Laamanen, Tomi
• 署名单位: York University - Canada; Aalto University
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.876
• 发表日期: 2011
• 页码: 212-227
• 关键词: multiple agency theory; COMPENSATION; governance; Outside directors; risk taking

摘要

This paper contributes to multiple agency theory by examining how the compensation schemes awarded to outside directors and the CEO jointly affect firm-level risk taking. Using data of the S&P 1500 firms from 1997 to 2006, we find support for earlier arguments that providing the CEO, the outside directors, or both with stock options increases risk taking. More importantly, we find that compensating outside directors with stock options has significantly stronger effects than CEO stock options. Finally, contrary to what one would expect, we find that these effects are mutually substituting; that is, if both the outside directors and the CEO are provided with stock option compensation, outside directors' incentives weaken the effect of the CEO's incentives on firms' risk taking. Copyright (C) 2010 John Wiley & Sons, Ltd.