The book answers a simple question: when managers and companies face a decision with two outcomes that are safe and risky, what leads them to choose the risky alternative? The answer starts with a detailed review of the theory behind risk and decision making by managers. The book then gathers...

Over the past fifty years, financial and legal theory have predicted that owners of firms may have incentives to take risks that have positive expected value from the perspective of firms' equity holders but negative expected value from the perspective of total firm value and of society as a...