• DOI:10.1016/J.JFINECO.2004.09.004
Corpus ID: 34956739

Managerial Incentives and Risk-taking

@article{Coles2006ManagerialIA,
  title={Managerial Incentives and Risk-taking},
  author={J. Coles and N. Daniel and L. Naveen},
  journal={Journal of Financial Economics},
  year={2006},
  volume={79},
  pages={431-468}
}

J. Coles, N. Daniel, L. Naveen

Published 2006

Economics

Journal of Financial Economics

This paper provides empirical evidence of a strong causal relation between the structure of managerial compensation and investment policy, debt policy, and firm risk. Controlling for CEO pay-performance sensitivity (delta) and the feedback effects of firm policy and risk on the structure of the managerial compensation scheme, we find that higher sensitivity of CEO wealth to stock volatility (vega) implements riskier policy choices, including relatively more investment in R&D, less investment in… CONTINUE READING

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