Discussion of CEO compensation and corporate risk-taking: Evidence from a natural experiment

• 成果类型: Article
• 署名作者: Armstrong, Christopher S.
• 署名单位: University of Pennsylvania
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2013.11.003
• 发表日期: 2013
• 关键词: officer equity incentives; accounting irregularities; weak instruments; identification; regression

摘要

Gormley, Matsa, and Milbourn (in this issue) examine the design and causal effects of CEOs' equity portfolio incentives on firm risk in a novel research setting in which certain firms experience a large exogenous shock that increases their left-tail risk and reduces their investment opportunities. Gormley et al. find that boards and CEOs both make adjustments to CEOs' equity portfolios following the shock. They also find that CEOs with more convex equity portfolios (i.e., Vega) prior to the shock reduce risk less following the shock. Despite certain measurement and identification concerns, Gormley et al. is an innovative attempt to address an important and challenging research question. Partial identification and sensitivity analysis an important class of techniques that are well-suited for providing causal inferences about Gormley et al.'s and other important research questions that are impeded by endogeneity concerns. (C) 2013 Elsevier B.V. All rights reserved.