Moving Closer to the Action: Examining Compensation Design Effects on Firm Risk
Published Online:17 Apr 2008https://doi.org/10.1287/orsc.1070.0317
References
- Why do managers diversify their firms? Agency reconsidered. J. Finance (2003) 58:71–118Crossref, Google Scholar
- Managerial incentives and corporate investment and financing decisions. J. Finance (1987) 42:823–837Crossref, Google Scholar
- Multiple Regression: Testing and Interpreting Interactions (1991) (Newbury Park, Sage, CA) Google Scholar
- Risk reduction as a managerial motive for conglomerate mergers. Bell J. Econom. (1981) 12:605–617Crossref, Google Scholar
- Self-Efficacy: The Exercise of Control (1997) (W. H. Freeman and Company, New York) Google Scholar
- Managerial compensation and firm performance: A general research framework. Acad. Management J. (1998) 41:135–145Crossref, Google Scholar
- Managerial incentives, monitoring, and risk bearing: A study of executive compensation, ownership, and board structure in initial public offerings. Admin. Sci. Quart. (1994) 39:313–335Crossref, Google Scholar
- Executive compensation as an agency problem. J. Econom. Perspectives (2004) 17:71–92Crossref, Google Scholar
- What to do (and not to do) with time-series cross-section data. Amer. Political Sci. Rev. (1995) 89(3):634–647Crossref, Google Scholar
- The Modern Corporation and Private Property (1932) (Harcourt, Brace & World, New York) Google Scholar
- Exercise behavior, valuation, and the incentive effects of employee stock options. J. Financial Econom. (2005) 76(2):445–470Crossref, Google Scholar
- , Klein K. J., Kozlowski S. W. J. Within-group agreement, non-independence, and reliability: Implications for data aggregation and analyses. Multilevel Theory, Research, and Methods in Organization (2000) (Jossey-Bass, San Francisco) 349–381Google Scholar
- Relationships among risk, incentive pay, and organizational performance. Acad. Management J. (1998) 41(3):283–297Crossref, Google Scholar
- A risk/return paradox for strategic management. Sloan Management Rev. (1980) 21:27–31Google Scholar
- CEO stock-based compensation: An empirical analysis of incentive-intensity, relative mix, and economic determinants. J. Bus. (2000) 73(4):661–693Crossref, Google Scholar
- Top management team compensation: The missing link between CEO pay and firm performance? Strategic Management J. (2002) 23(4):367–375Crossref, Google Scholar
- Strategy research and panel data: Evidence and implications. J. Management (2006) 3:449–474Crossref, Google Scholar
- Executive stock option repricing, internal governance mechanisms, and management turnover. J. Financial Econom. (2003) 69(2):153–189Crossref, Google Scholar
- , Coffee J. C., Lowenstein L., Rose-Ackerman S. Shareholders versus managers: The strain in the corporate web. Knights, Raiders, and Targets: The Impact of the Hostile Take-Over (1988) (Oxford University Press, New York) 77–134Google Scholar
- Applied Multiple Regression/Correlation Analysis for the Behavioral Sciences (1983) (Lawrence Erlbaum Associates Publications, Hillsdale, NJ) . 2nd ed.Google Scholar
- Managerial incentives and risk-taking. J. Financial Econom. (2006) 79:431–468Crossref, Google Scholar
- CEO knockdown. Fortune (2005) 151(April 4):19–20Google Scholar
- Executive equity compensation and incentives: A survey. Econom. Policy Rev.—Federal Reserve Bank of New York (2003) 9(1):27–50Google Scholar
- Corporate governance: Decades of dialogue and data. Acad. Management Rev. (2003) 28(3):371–382Crossref, Google Scholar
- The effects of endowment and loss aversion in managerial stock option valuation. Acad. Management J. (2007) 50(1):1–18Crossref, Google Scholar
- The spurious correlation of ratios that have common variables: A Monte Carlo examination of Pearson's formula. J. General Psych. (1997) 124(2):182–193Crossref, Google Scholar
- Pay daze: Linking pay to performance is harder than it looks. CFO (2006) December):69–73Google Scholar
- Agency theory: An assessment and review. Acad. Management Rev. (1989) 14(1):57–74Crossref, Google Scholar
- Inflation uncertainty and expected returns on treasury bills. J. Political Econom. (1976) 84(3):427–448Crossref, Google Scholar
- Top-management-team tenure and organizational outcomes: The moderating role of managerial discretion. Admin. Sci. Quart. (1990) 35(4):484–503Crossref, Google Scholar
- Strategic Leadership: Top Executives and Their Effects on Organizations (1996) (West Publishing Company, St. Paul, MN) Google Scholar
- User's guide to ratio variables. Amer. Sociol. Rev. (1985) 50(5):713–722Crossref, Google Scholar
- Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups. Acad. Management Rev. (1999) 24(3):489–505Crossref, Google Scholar
- Executive compensation and principal-agent theory. J. Political Econom. (1994) 102(6):1175–1199Crossref, Google Scholar
- Breaches in the boardroom: Organizational identity and conflicts of commitment in a nonprofit organization. Organ. Sci. (1997) 8(6):593–611Link, Google Scholar
- , Ferris G. Executive compensation: A reassessment and a future research agenda. Research in Personnel and Human Resource Management (1994) 12(JAI Press, Greenwich, CT) 959–684Google Scholar
- Reframing executive compensation: An assessment and outlook. J. Management (1997) 23(3):291–375Crossref, Google Scholar
- CEO pay at the crossroads of Wall Street and Main: Toward the strategic design of executive compensation. Acad. Management Executive (1998) 12(1):43–57Google Scholar
- Panel models in sociological research: Theory into practice. Annual Rev. Sociol. (2004) 30:507–544Crossref, Google Scholar
- Stock options of undiversified executives. J. Accounting Econom. (2002) 33(1):3–42Crossref, Google Scholar
- Are CEOs really paid like bureaucrats? Quart. J. Econom. (1998) 3:653–692Crossref, Google Scholar
- Incentives to cheat: The influence of executive compensation and firm performance on financial misrepresentation. Organ. Sci. (2007) 18(3):350–367Link, Google Scholar
- Specification tests in econometrics. Econometrica (1978) 46:1251–1271Crossref, Google Scholar
- Goals as reference points. Cognitive Psych. (1999a) 38(1):79–109Crossref, Google Scholar
- Psychological factors and stock option exercise. Quart. J. Econom. (1999b) 114:601–627Crossref, Google Scholar
- Effects of ownership structure and control on corporate productivity. Acad. Management J. (1989) 1:25–47Crossref, Google Scholar
- Conceptualizing executive hubris: The role of (hyper-) core self-evaluations in strategic decision-making. Strategic Management J. (2005) 26(4):297–320Crossref, Google Scholar
- Moral hazard and observability. Bell J. Econom. (1979) 10(1):74–91Crossref, Google Scholar
- Managerial incentives and investment in R&D in large multiproduct firms. Organ. Sci. (1993) 4(2):325–341Link, Google Scholar
- Employee stock option exercises. An empirical analysis. J. Accounting Econom. (1996) 21:5–43Crossref, Google Scholar
- Theory of the firm: Managerial behavior, agency costs, and ownership structure. J. Financial Econom. (1976) 3(October):305–360Crossref, Google Scholar
- Performance pay and top-management incentives. J. Political Econom. (1990) 98(2):225–263Crossref, Google Scholar
- Prospect theory: An analysis of decision under risk. Econometrica (1979) 47(2):263–290Crossref, Google Scholar
- The endowment effect, loss aversion, and status quo bias. J. Econom. Perspectives (1991) 5(1):193–206Crossref, Google Scholar
- Consequences of violating the independence assumption in analysis of variance. Psych. Bull. (1986) 99:422–431Crossref, Google Scholar
- Meet the new stock option. The Boston Globe (2005) April 17). www.boston.com/business/markets/articles/2005/04/17/meet_the_new_stock_optionGoogle Scholar
- Spurious correlation and the fallacy of the ratio standard revisited. J. Royal Statist. Soc. Ser. (1993) 156(3):379–392Crossref, Google Scholar
- Author's reply. J. Royal Statist. Soc. (1995) 158(3):623–625Google Scholar
- Framing decisions: Hypothetical and real. Organ. Behav. Human Decision Processes (2002) 89(2):1162–1175Crossref, Google Scholar
- The association between performance plan adoption and corporate capital investment. J. Accounting Econom. (1983) 1:3–31Crossref, Google Scholar
- Disentangling compensation and employment risks using the behavioral agency model. Strategic Management J. (2007) 28:1001–1019Crossref, Google Scholar
- Kicking the stock-options habit. BusinessWeek Online (2005) Febuary 16). http://www.businessweek.comGoogle Scholar
- Rewarding Excellence: Pay Strategies for the New Economy (2000) (Jossey-Bass, San Francisco) Google Scholar
- , Berkowitz L. Between hope and fear: The psychology of risk. Advances in Experimental Social Psychology (1987) 20(Academic Press, Inc., San Diego) 255–295Crossref, Google Scholar
- Taking Risks (1986) (The Free Press, New York) Google Scholar
- The CEO, the board of directors, and executive compensation: Economic and psychological perspectives. Indust. Corporate Change (1995) 11:292–332Google Scholar
- Managerial perspectives on risk and risk-taking. Management Sci. (1987) 33(11):1404–1418Link, Google Scholar
- Variable risk preferences and the focus of attention. Psych. Rev. (1992) 1:172–195Crossref, Google Scholar
- How much does industry matter, really? Strategic Management J. (1997) 18:15–30Crossref, Google Scholar
- Decision making in an organizational setting: Cognitive and organizational influences on risk assessment in commercial lending. Acad. Management J. (1997) 40:1063–1088Crossref, Google Scholar
- Risk and return in organizational decision making. Acad. Management J. (1999) 42:330–340Crossref, Google Scholar
- Executive compensation structure, ownership, and firm performance. J. Financial Econom. (1995) 38:163–184Crossref, Google Scholar
- Compensation (2002) 7th ed.(McGraw-Hill, Irwin, Boston) Google Scholar
- The effects of research and development intensity on managerial compensation in large organizations. J. High Tech. Management Res. (1991) 2(1):133–150Crossref, Google Scholar
- Strategic risk and corporate performance: An analysis of alternative risk measures. Acad. Management J. (1990) 33(4):756–779Crossref, Google Scholar
- An empirical test of heuristics and biases affecting real option valuation. Strategic Management J. (2004) 25(3):269–284Crossref, Google Scholar
- The fit between CEO compensation design and firm risk. Acad. Management J. (2002) 4:745–791Crossref, Google Scholar
- Corporate America's pay pal. New York Times (2006) Oct. 15, Section 3):1Google Scholar
- , Ashenfelter O., Card D. Executive compensation. Handbook of Labor Economics (1999) III(North Holland, New York) Crossref, Google Scholar
- NCEO The National Center for Employee Ownership. (2005) . http://nceo.org/library/eo_stat.htmlGoogle Scholar
- Leaders, riverboat gamblers, or purposeful unintended consequences in the management of complex dangerous technologies. Acad. Management J. (1988) 31:924–947Crossref, Google Scholar
- Setting the CEO's pay: It's more than simple economics. Organ. Dynamnics (2007) 36:1–12Crossref, Google Scholar
- Decoupling risk taking from income stream uncertainty: A holistic model of risk. Strategic Management J. (1999) 20:1037–1062Crossref, Google Scholar
- Measuring investment distortions when risk-averse managers decide whether to undertake risky projects. Financial Mangement (2005) 21–60Crossref, Google Scholar
- The role of affect in WTA/WTP disparity. J. Behavioral Decision Making (2003) 16(4):309–330Crossref, Google Scholar
- On studying managerial elites. Strategic Management J. (1992) 13(2):163–182Crossref, Google Scholar
- , Eatwell J., Milgate M., Newman P. Time preference. The New Palgrawe: Utility and Probability (1990) (Macmillan, London) Google Scholar
- Personnel psychology: Performance evaluation and pay for performance. Annual Rev. Psych. (2005) 56:571–600Crossref, Google Scholar
- Behavioral responses of CEOs to stock ownership and stock option pay. Acad. Management J. (2001) 44(3):477–492Crossref, Google Scholar
- Swinging for the fences: The effects of CEO stock options on company risk-taking and performance. Acad. Management J. (2007) 50:1055–1078Crossref, Google Scholar
- Risk Taking: A Managerial Perspective (1995) (Russell Sage Foundation, New York) Google Scholar
- Portfolio Theory and Capital Markets (1970) (McGraw Hill, New York) Google Scholar
- Risk sharing and incentives in the principal and agent relationship. Bell J. Econom. (1979) 10(1):55–73Crossref, Google Scholar
- Intertemporal framing issues in management compensation. Organ. Behav. Human Decision Processes (1996) 66:42–58Crossref, Google Scholar
- Pay disparities within top management groups: Evidence of harmful effects on performance of high-technology firms. Organ. Sci. (2005) 16(3):259–274Link, Google Scholar
- The relationship between overconfidence and the introduction of risky products: Evidence from a field study. Acad. Management J. (2003) 46(2):139–150Crossref, Google Scholar
- Determinants of risky decision-making behavior: A test of the mediating role of risk perceptions and risk propensity. Acad. Management J. (1995) 38:1573–1592Crossref, Google Scholar
- Gambling with the house money and trying to break even: The effects of prior outcomes on risky choice. Management Sci. (1990) 36(6):643–660Link, Google Scholar
- Culture and CEO compensation. Organ. Sci. (2004) 15(6):657–670Link, Google Scholar
- Disaggregating the agency contract: The effects of monitoring, incentive alignment, and term in office on agent decision making. Acad. Management J. (1997) 40(3):584–603Crossref, Google Scholar
- How much does performance matter? A meta-analysis of CEO pay studies. J. Management (2000) 26(2):301–339Crossref, Google Scholar
- Rational choice and the framing of decisions. J. Bus. (1986) 59:251–278Crossref, Google Scholar
- Overpaid CEOs and underpaid managers: Fairness and executive compensation. Organ. Sci. (2006) 17(3):527–544Link, Google Scholar
- Risk-return associations: Paradox or artifact? An empirically tested explanation. Strategic Management J. (1991) 12:231–242Crossref, Google Scholar
- A behavioral agency model of managerial risk taking. Acad. Management Rev. (1998) 23(1):133–153Crossref, Google Scholar
- Econometric Analysis of Cross Section and Panel Data (2002) (MIT Press, Cambridge, MA) Google Scholar
- Influences of top management team incentives on firm risk taking. Strategic Management J. (2007) 28(1):81–89Crossref, Google Scholar
- Good timing: CEO stock option awards and company news announcements. J. Finance (1997) 2:449–477Crossref, Google Scholar

