Compensation, Incentives, and the Duality of Risk Aversion and Riskiness

By Stephen A. Ross. 2004

645 citations recorded by the source corpus.

Subfields: Economics and Econometrics, General Decision Sciences

View Paper: https://www.semanticscholar.org/paper/e72c89038482e059ade45b8b490571fb52a0c8a5

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Citations in the corpus

The Relation between Equity Incentives and Misreporting: The Role of Risk-Taking Incentives (2013, background): “…the effect of equity risk on the total riskiness of a manager’s equity portfolio, generally discouraging risk-averse managers from taking risky projects—the “risk effect” (e.g., Lambert, Larcker, and Verrecchia, 1991; Carpenter, 2000; Ross, 2004; Lewellen, 2006; Armstrong and Vashishtha, 2012).”
High-Water Marks: High Risk Appetites? Convex Compensation, Long Horizons, and Portfolio Choice (2009, background): “They also seem to avoid the problem of biasing portfolios toward replicating an index, as is the case of relative performance evaluation.3 1This intuition has been challenged by Carpenter (2000) and Ross (2004).”
Bank CEO Incentives and the Credit Crisis (2009, neutral): “Barring a change in the SEC regulations, the stock awards granted in January 2007 in respect of each executive’s 2006 performance will be reported in the Grants of Plan-Based Awards Table in the 2008 proxy statement if the executive is a named executive officer in 2007.””
Executive Stock Options, Differential Risk-Taking Incentives, and Firm Value (2012, background): “However, subsequent studies (e.g., Lambert, Larcker, and Verrecchia, 1991; Carpenter, 2000; Ross, 2004; Lewellen, 2006) point out”
Managerial risk-taking behavior and equity-based compensation (2009, neutral): “However, equity-based compensation does not necessarily lead to increased risk-taking since it can increase the sensitivity of the manager's portfolio to firm stock price movements (Carpenter, 2000; Ross, 2004).”
Top Management Incentives and the Pricing of Corporate Public Debt (2006, neutral): “…and Stulz (1985), and Guay (1999)), recent work suggests that risk-averse managers can have relatively few incentives to invest in highly risky projects even when they receive large amounts of option-based compensation (Carpenter (2000), Parrino, Poteshman, and Weisbach (2005), and Ross (2004)).”
Corporate governance in the 2007–2008 financial crisis: Evidence from financial institutions worldwide (2012, background): “” (Financial Times, July 9, 2007) 7 Although some studies argue that stock options increase management’s willingness to take risk, Ross (2004) shows that this is generally not the case.”
Optimal Asset Allocation and Risk Shifting in Money Management (2007, background): “Ross (2004) investigates the relation between the manager’s fee structure and her attitude toward risk within a general class of preferences and compensation structures.”
Optimal Reinsurance Arrangements Under Tail Risk Measures (2009, background): “This point is also exemplified by Ross (2004) in another context, that a concave function shifted by a convex transformation is not necessarily a concave function anymore.”
Investment, Idiosyncratic Risk, and Ownership (2011, neutral): “where the dependent variable is the firm’s investment rate (It/Kt−1), and Z i, t is a vector of controls: i) log Tobin’s Q, defined as the ratio of a firm’s market value to the replacement cost of capital (log(Vt/Kt)) and measured as in Fazzari, Hubbard and Petersen (1988); ii) the ratio of cashflow”
Taxing the Rich (2016, neutral): “Contributions include Basak et al. (2007), Carpenter (2000), Ross (2004), and Makarov and Plantin (2015).”
Managerial Attitudes and Corporate Actions (2013, background): “The cost of giving appropriate risk taking incentives is higher if the CEO is risk-averse (Ross, 2004).”