The paper investigates the role of CEO's equity and risk incentives in boosting securitization in the financial industry and in motivating executives to reduce the perceived risk while betting on it. Using a sample of US financial institutions over the period 2003-2009 we document that CEOs with...

Managers often have foreknowledge of events that can increase future firm risks. In this study, I examine whether managers alter their personal portfolios based on their foreknowledge. Specifically, I examine whether managers expedite or delay their stock option exercises in anticipation of...

In this study we analyze how CEO risk incentives affect the efficiency of research and development (R&D) investments. We examine a sample of 843 cases where firms increase their R&D investments by an economically significant amount over the period from 1995 to 2006. We find that firms with...

This paper contributes to the literature by indicating how the effect of monetary policies, such as interest rates, the zero lower bound (ZLB) and differential volatility between long-term and short-term interest rates, impact the incentives of firms' managers in the US in recent years and how...

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...

We measure a manager's risk-taking incentives as the total sensitivity of the manager's debt, stock, and option holdings to firm volatility. We compare this measure to the option vega and to relative measures used by the prior literature. Vega does not capture risk-taking incentives from...

This paper studies dynamic compensation and risk management under cash flow volatility shocks. The optimal contract depends critically on firms' ability to make good on promised future payments to managers. When volatility is low, firms with full commitment ability implement high pay-performance...

The paper investigates the role of CEO risk incentives in increasing the riskiness of securitization transactions in the financial industry. Using a sample of US financial institutions, and a system model to account for the endogeneity problem between risk incentives and securitization, we...

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...

Political uncertainty is a risk that affects the decision-making processes of firms. Therefore, it is crucial to understand what causes political uncertainty and include appropriate indicators in a risk management system. This study introduces election polls as a new determinant of political...