We present a general-equilibrium theory of contracting in which managers are concerned about their social standing in a … expose firm value to aggregate risk, can help them catch up with executive peers' pay during industry fluctuations. Excessive … systemic risk-taking with pay for luck emerges in equilibrium. We also discuss a number of testable implications for …

managers' tax rates — we do not find similar relations for middle-income tax rates. We also find that the tax-induced risk …. Collectively, our findings provide evidence that managers' personal income taxes influence their corporate risk-taking …We examine the relation between managers' personal income tax rates and their corporate investment decisions. Using …

CEO incentives to mitigate the risk-shifting incentives of firm managers …

If managers are risk-averse and compensation schemes are not directly linked to shareholder wealth, incentives to … asymmetric incentives in these two variables. Thus, if managers are risk-averse, their incentives to reduce the impact of … then show how serial correlation in shocks, the relative variance of shocks and the ability of managers to influence the …

risk-taking whereas low-ability managers refrain from risk-taking. High-ability managers cut capital expenditures but spend … addition to the effects of previously examined determinants, firm decisions are affected not just by the managers’ explicit …-ability managers and low-ability managers have opposite effects on firm behavior and firm value. High-ability managers are receptive to …

We present a model where bank assets are a portfolio of risky debt claims and analyze stockholders' risk … increases, risk shifting by borrowers increases, even if their leverage is unchanged (zombie lending). (2) While the literature … increase prevails through a second channel: an increase in risk shifting. (3) Risk shifting decreases with the diversification …

Purpose: The purpose of this paper is to theoretically examine the risk-taking decision of corporate defined benefits … incorporate the fact that in some cases the optimal solution is in the middle range. Therefore, the corporate risk-taking behavior …

In this paper, we study the worst-case distortion risk measure when information about distortion functions is partially … independent of the risk to be measured and the corresponding worst-case distortion risk measure is a combination of several VaR … distortion functions is defined by the riskiness of one single risk, the explicit form of the worst-case distortion function is …

We investigate the impact of workers' exposure to unemployment risk on CEO incentive compensation. Exploiting state … insurance benefits become more generous boards increase the convex payoff structure of CEO pay to encourage risk-taking. The …

risk to managers and encouraging risk-substitution; that is, managers with relatively undiversified personal portfolios … tend to pass up profitable projects with high idiosyncratic (firm-specific) risk in favor of less-profitable projects that … have greater aggregate (market) risk. Using parametric and semi-parametric estimation methods, we examine how managerial …