Managerial Hedging and Incentive Compensation in Stock Market Economies Incentive compensation exposes managers to the risk of their firms. Managers can hedge their aggregate risk exposure by trading in financial markets, but cannot hedge their firmspecific exposure. This gives them an incentive to pass up firm-specific projects in favor of standard projects that contain greater aggregate risk....

paying attention to the relative alignment of individual and organization goals requires that this fact be considered sometimes happens struggle between these two phenomena for several reasons. these two can be in conflict with one another. hence, one of the primary problem that managers are encountered, is that they attempt to combine and reconcile two somewhat contradictory issues, and they a...

Handling Editor: Stephanie Castro In this study, we develop and examine a model of leaders' impression management during organizational decline by elaborating on the roles of publicity, image concerns, and incentive compensation. We propose that the publicity of decline is an important antecedent of leaders' impression management during decline. We also examine how leaders' image concerns media...

An increasing number of environmental protection programs offers financial compensation to farmers in exchange for conservation services. Incentive-compatible contracts can be designed to mitigate excess compensation, but the extant literature suggests that outcomes are always second-best so that other instruments (such as conservation auctions) may be preferred. We argue that the claim regardi...

The paper examines the role of executive compensation in inducing management behavior that triggers private securities litigation. Incentive pay in the form of options is found to increase the probability of securities class action lawsuits, holding constant a wide range of other firm characteristics. In contrast, base pay levels and share ownership do not have a significant impact on lawsuit i...

This study investigates the effects of attraction, retention, and incentive objectives on business unit pay strategy. Economic and psychological theories argue that differences in compensation objectives should lead to variations in organizations’ pay strategies, including decisions regarding the level of pay relative to its labor market and the emphasis on different compensation elements. Howe...

Ce document est publié dans l' intention de rendre accessible les résultats préliminaires de la recherche effectuée au CIRANO, afin de susciter des échanges et des suggestions. Les idées et les opinions émises sont sous l' unique responsabilité des auteurs, et ne représentent pas nécessairement les positions du CIRANO ou de ses partenaires. This paper presents preliminary research carried out a...

This study examines how the risk-taking incentive of top executives drives the strategic risk-taking in corporate IT implementation. We use the risk incentive provided in executive compensation to capture top executives’ risk-taking incentive, and develop measures of aggressive IT implementation to capture strategic risk-taking in IT implementation. Our analysis provides empirical evidence that...

I propose a simple model with complete and perfect information that analyzes the relation between managerial incentive compensation and the firm’s choice between public and bank debt. My analysis of firm-level data over the period 1992-2005 offers considerable support to the predictions of the model. I find a positive relation between the level of incentive compensation and the preference for b...