Does Option Compensation Increase Managerial Risk Appetite

By Jennifer N. Carpenter. 2000

945 citations recorded by the source corpus.

Subfields: Finance

View Paper: https://www.semanticscholar.org/paper/e730a9808c3328da3b01d693aba4286f71b079e1

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Citations in the corpus

Optimal Asset Allocation and Risk Shifting in Money Management (2007, background): “…in a dynamic setting revisits Chevalier and Ellison and offers considerably different implications for managerial risk taking.5 Within a dynamic asset allocation framework like ours, Carpenter (2000) examines the risk-taking behavior of a fund manager with a convex, option-based compensation.”
Incentives and Risk Taking in Hedge Funds (2007, neutral): “We extend the model of Carpenter (2000) along two lines: we incorporate management fees and investments of the manager in the fund.”
A nonparametric test of market timing (2003, neutral): “…a CARA preference is large when there is non-linearity in the incentive, explicitly or implicitly, in the forms of benchmark evaluation (Admati and Pfleiderer, 1997), option compensation (Carpenter, 2000), or non-linear flow-to-performance responses by fund investors (Chevalier and Ellison, 1997).”
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). Hirshleifer and Suh (1992) show that on the one hand, equitybased compensation can encou”
Managerial Incentives and Risk-taking (2006, neutral): “Carpenter (2000) examines the optimal investment policy for a riskaverse fund manager compensated with call options.”
Taxing the Rich (2016, neutral): “Contributions include Basak et al. (2007), Carpenter (2000), Ross (2004), and Makarov and Plantin (2015).”
Asset Prices and Institutional Investors (2013, background): “For example, Carpenter (2000), Basak, Pavlova, and Shapiro (2007, 2008), Hodder and Jackwerth (2007), Binsbergen, Brandt, and Koijen (2008), and Chen and Pennacchi (2009) show that future fund flows induce a manager to tilt her portfolio towards stocks that belong to her benchmark.”
The Price of Diversifiable Risk in Venture Capital and Private Equity (2013, neutral): “Although most work on option based compensation suggests that options cause managers to increase risk Carpenter (2000) also shows that options may not always cause managers to increase risk.”
Optimal Portfolio Choice under Loss Aversion (2000, neutral): “Although nonconcave objectives have been examined in other papers (see, for example, Carpenter, 2000), our setting is distinct in its focus on utility functions with the property of loss aversion.”
Managerial Incentives and Stock Price Manipulation (2013, neutral): “where the manager’s choice for leisure L is substituted in from equation (12).”