Using a news-based index of aggregate policy uncertainty in the US economy, we document a strong negative relation between policy uncertainty and corporate risk-taking. We show that high levels of policy uncertainty are associated with significantly lower future stock return volatility at the...

The purpose of this research is to investigate factors that contribute to technology firms paying higher compensation than non-technology firms, and why the mix of compensation at technology firms is different than the compensation packages at non-technology firms. Using a sample of 1,009...

We analyze the effects of CEOs' layoff risk on their risk choice while overseeing a firm. A CEO, whose managerial ability is unknown, is fired if her expected ability is below average. Her risk choice changes the informativeness of output and market's belief about her ability. She can decrease...

Research into group decision-making suggests that any optimal managerial compensation incentive design should incorporate synergistic interrelationships among top executives within a firm. This paper investigates whether the equity incentive structure of a management team affects firm-level...

Academic and anecdotal evidence indicates that incentive systems often provide short-term payouts without regard for long-term consequences. New detailed disclosures mandated by FIN No. 48, Accounting for Uncertainty in Income Taxes, enable us to use a tax setting to investigate whether boards...

Agency theory suggests the use relative performance evaluation (RPE) to filter out systematic risks from a noisy performance measure. The presence of exposure risk, i.e. if the exposure to the systematic risks moves over time, however precludes complete filtering. In the present study I first...

We document evidence that the CEOs who lead the firms that face higher climate change risk (CCR) receive higher equity-based compensation. Our finding is consistent with the compensating-wedge-differential theory and survives numerous robustness and endogeneity tests. The result is more...

Traditionally, researchers have had difficulty testing the relationship between the degree of risk or uncertainty in workers' environments and incentive pay. The authors employ Prendergast's (2002) theory that incorporates the delegation of worker authority into the principal-agent model to...

A performance standard's horizon is the time given to achieve the standard. Horizons vary considerably in practice, and the goal-setting literature provides mixed evidence on whether short or long horizons are more effective at eliciting effort from workers. I predict and find that uncertainty...

Compensation schemes have been blamed for encouraging excess risk-taking on the part of managers within the financial system and real economy. In general, compensation cannot decrease below the base salary, while gains from bonuses can be limitless. The potential link between compensation and...