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Colonnello, Stefano; Curatola, Giuliano Antonio; Xia, Shuo - 2022 - This draft: October 19, 2022

Equity pay has been the primary component of managerial compensation packages at US public firms since the early 1990s. Using a comprehensive sample of top executives from 1992-2020, we estimate to what extent they trade firm equity held in their portfolios to neutralize increments in ownership...

Persistent link: https://www.econbiz.de/10013411812

Trading away incentives

Colonnello, Stefano; Curatola, Giuliano Antonio; Xia, Shuo - 2022

Persistent link: https://www.econbiz.de/10013412974

Equity incentives, disclosure quality, and stock liquidity risk

Wruck, Karen H.; Wu, Yi Lin - 2017

We provide evidence that CEO equity incentives, especially stock options, influence stock liquidity risk via information disclosure quality. We document a negative association between CEO options and the quality of future managerial disclosure policy. Contributing to the literature on CEO...

Persistent link: https://www.econbiz.de/10011963233

Industry Tournament Incentives and Corporate Hedging Policies

Lonare, Gunratan - 2020

corporate hedging policies. We exploit the textual analysis of 10-Ks to generate corporate hedging proxies. We find that the … of corporate hedging on the adverse effects of risk-inducing ITIs on the cost of debt and stock price crash risk, which … could be the possible reasons for the relation. Also, the relation between ITIs and corporate hedging is less pronounced for …

Persistent link: https://www.econbiz.de/10012849052

Executive stock options, differential risk-taking incentives, and firm value

Armstrong, Christopher S.; Vashishtha, Rahul - In: Journal of Financial Economics 104 (2012) 1, pp. 70-88

The sensitivity of stock options' payoff to return volatility, or vega, provides risk-averse CEOs with an incentive to increase their firms' risk more by increasing systematic rather than idiosyncratic risk. This effect manifests because any increase in the firm's systematic risk can be hedged...

Persistent link: https://www.econbiz.de/10010571660

CEO Pay Incentives and Risk-Taking : Evidence from Bank Acquisitions

Hagendorff, Jens - 2011

We analyze how the structure of executive compensation affects the risk choices made by bank CEOs. For a sample of acquiring US banks, we employ the Merton distance to default model to show that CEOs with higher pay-risk sensitivity engage in risk-inducing mergers. Our findings are driven by two...

Persistent link: https://www.econbiz.de/10013133407

CEO Bonus Compensation and Bank Default Risk : Evidence from the U.S. and Europe

Vallascas, Francesco - 2017

We investigate the link between the incentive mechanisms embedded in CEO cash bonuses and the riskiness of banks. For a sample of U.S. and European banks, we employ the Merton distance to default model to show that increases in CEO cash bonuses lower the default risk of a bank. However, we find...

Persistent link: https://www.econbiz.de/10012976340

Risk-Shifting and the Regulation of Bank CEOs' Compensation

Chaigneau, Pierre - 2016

This paper analyzes the effects of two regulatory mechanisms, namely a regulation of the structure of bank CEOs incentive pay and sanctions for the CEOs of failed banks, on bank risk shifting. We extend a standard model of CEO compensation by incorporating leverage and an investment decision. To...

Persistent link: https://www.econbiz.de/10013008823

Executive Compensation and Risk Taking in European Banking

Ayadi, Rym - 2012

Recent financial crisis has renewed attention on compensation schemes and their impact on risk-taking in depository institutions. Without ample theoretical and empirical backing, the recent policy proposals in the EU have suggested that long-term incentive plans that are closely linked to bank...

Persistent link: https://www.econbiz.de/10013109642

Abandon ship : inside debt and risk-taking incentives in bad times

Cambrea, Domenico Rocco; Colonnello, Stefano; Curatola, … - 2016 - This draft: December 13, 2016

We develop a model that endogenizes the manager's choice of firm risk and of inside debt investment strategy. Our model delivers two predictions. First, managers have an incentive to reduce the correlation between inside debt and company stock in bad times. Second, managers that reduce such a...

Persistent link: https://www.econbiz.de/10011572771