A main prediction of agency theory is the well known risk-incentive trade-off. Incentive contracts should be found in … environments with little uncertainty and for agents with low degrees of risk aversion. There is an ongoing debate in the literature … use of a unique representative data set, we find clear evidence that risk aversion has a highly significant and …

We provide evidence that CEO equity incentives, especially stock options, influence stock liquidity risk via … disclosure policy. Contributing to the literature on CEO risk-taking, we document a positive association between CEO options and … future systematic stock liquidity risk. Controlling for endogeneity, we show that information disclosure quality is an …

We investigate the risk choices of risk averse CEOs. Following recent theoretical work, we expect CEO risk aversion to … firm risk, even in the presence of strong risk taking incentives. Our results are robust to controls for the sensitivity of … CEO wealth to stock price changes, firm risk determinants, the endogenous feedback effects of firm risk on CEO incentives …

Classic financial agency theory recommends compensation through stock options rather than shares to induce risk … neutrality in otherwise risk averse agents. In an experiment, we find that subjects acting as executives do also take risks that … excessive risks - a result that cannot be accounted for by classic incentive theory. We develop a basic model in which such risk …