This study examines three issues related to the sensitivity of bank CEO compensation to risk, or vega: (1) its … relevance compared with CEO compensation vega in industrial firms; (2) its determinants; and (3) its effect on bank risk …-taking. Using a sample of 156 U.S. bank holding companies (BHCs) and a benchmark sample of 544 industrial firms over the period 1993 …

compensation increase a bank’s contribution to systemic distress risk and systemic crash risk. We also predict and find that this … CEO incentive–systemic risk relation operates through three channels: (i) a bank’s engagement in non-interest income … relation is moderated by information transparency, bank size, market liquidity, and financial crisis. We also discuss relevant …