CEO Incentives for Risk-Taking and Compensation Duration
成果类型：
Article
署名作者：
Kubick, Thomas R.; Robinson, John R.; Starks, Laura T.
署名单位：
University of Nebraska System; University of Nebraska Lincoln; Texas A&M University System; Texas A&M University College Station; Mays Business School; University of Texas System; University of Texas Austin
刊物名称：
ACCOUNTING REVIEW
ISSN/ISSBN：
0001-4826
DOI：
10.2308/TAR-2020-0784
发表日期：
2020
页码：
247-270
关键词：
摘要：
When determining new equity grants, corporate boards face a tradeoff between the CEO's incentives generated from the grant's duration versus those arising from the convexity of the embedded equity risk. We hypothesize and find that boards lengthen the horizon of new compensation grants in the presence of greater preexisting compensation sensitivity to stock return volatility (vega). In addition, consistent with our hypothesis, we find stronger results in the presence of greater left-tail risk. Further, employing two exogenous shocks to left-tail risk, we provide evidence consistent with our hypothesis that grant horizons are related to risk incentives. Our analysis of the interaction of these two incentive mechanisms provides new insights on compensation contracting.
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