The Tenuous Trade‐off between Risk and Incentives

By Canice Prendergast. Journal of Political Economy, 2002

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CEO Personal Risk-Taking and Corporate Policies (2016, neutral): “First, with the notable exception of Graham et al. (2012), the relation between incentives and risk-taking is difﬁcult to observe empirically (Prendergast (2002)).”
Incentive Compensation when Executives can Hedge the Market: Evidence of Relative Performance Evaluation in the Cross Section (2003, background): “Demsetz and Lehn (1985), Bizjak, Brickley, and Coles (1993), and Prendergast (2002) all argue that the marginal product of CEO effort may also be correlated with firm size and risk, and Core and Guay (2002) find that if Aggarwal and Samwick’s (1999a) risk measure is decomposed into market…”
Price versus Non‐Price Performance Measures in Optimal CEO Compensation Contracts (2003, neutral): “hether CEO compensation is adequately described by standard agency models is the subject of an active debate in the academic literature (e.g., Prendergast 2002 ).”