The Other Side of the Trade-Off : The Impact of Risk on Executive Compensation A Comment John Core *

@inproceedings{Guay2001TheOS,
  title={The Other Side of the Trade-Off : The Impact of Risk on Executive Compensation A Comment John Core *},
  author={Wayne Guay and S Hall},
  year={2001}
}
  • Wayne Guay, S Hall
  • Published 2001
In contrast to studies such as Demsetz and Lehn (1985) that predict and find a strong positive association between firm risk and ownership incentives, Aggarwal and Samwick (A&S 1999) predict and find a strong negative association. A key assumption of A&S's analysis is that firm risk is the sole determinant of the pay-performance sensitivity. Neither prior research nor the data support this assumption. When we replicate the A&S model with an augmented but parsimonious model of the CEO pay… CONTINUE READING

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All dollar amounts are in thousands ($000s) and have been converted to 1995 dollars using the consumer price index at December 31, 1995

Sample consists of ExecuComp data for CEOs for
Flow compensation is the sum of • 1995
View 7 Excerpts
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