NDLI: Does stock option-based executive compensation induce risk-taking? An analysis of the banking industry

Content Provider	Semantic Scholar
Author	Chen, C. R. Steiner, Thomas L. Whyte, Ann Marie
Copyright Year	2006
Abstract	Abstract We investigate the relation between option-based executive compensation and market measures of risk for a sample of commercial banks during the period of 1992–2000. We show that following deregulation, banks have increasingly employed stock option-based compensation. As a result, the structure of executive compensation induces risk-taking, and the stock of option-based wealth also induces risk-taking. The results are robust across alternative risk measures, statistical methodologies, and model specifications. Overall, our results support a management risk-taking hypothesis over a managerial risk aversion hypothesis. Our results have important implications for regulators in monitoring the risk levels of banks.
Starting Page	915
Ending Page	945
Page Count	31
File Format	PDF HTM / HTML
DOI	10.1016/j.jbankfin.2005.06.004
Volume Number	30
Alternate Webpage(s)	http://academic.udayton.edu/carlchen/Chan%20Research/JBF2006.pdf
Alternate Webpage(s)	http://isiarticles.com/bundles/Article/pre/pdf/18260.pdf
Alternate Webpage(s)	https://doi.org/10.1016/j.jbankfin.2005.06.004
Language	English
Access Restriction	Open
Content Type	Text
Resource Type	Article

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