Asset pricing theory postulates that a risk factor correlates with individuals' marginal utility of consumption. Hence, under plausible preferences, individuals should become more risk tolerant given favorable factor returns. We show that this wealth effect predicts a positive association...

The study investigates the evolution of CEO pay after the implementation of new disclosure rules in France. It opposes a managerial labor market view in which firms compete for CEO talent, and a governance institutions view that embraces managerial power, outrage constraint, and agency issues....