We investigate the link between the incentive mechanisms embedded in CEO cash bonuses and the riskiness of banks. For a sample of U.S. and European banks, we employ the Merton distance to default model to show that increases in CEO cash bonuses lower the default risk of a bank. However, we find...

A lot of research has been done on the CEO pay determinant factors. However, findings do not reach a single conclusion. To overcome this, in the present paper an effort will be made to introduce a unique worldwide formula for CEO remuneration and through this it will be attempted to relate CEO...