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incentives of US managers to adopt riskier business policies. Specifically, based on the agency problems between shareholders and … rates on managers’ risk-taking incentives proxied by the sensitivity of executive compensation to stock return volatility … increase the managers’ short-term risk-taking incentives and that those incentives contribute to the risk effectively taken by …
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We show theoretically and empirically that executives are paid less for their own firm's performance and more for their rivals' performance if an industry's firms are more commonly owned by the same set of investors. Higher common ownership also leads to higher unconditional total pay. We...
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