A behavioral agency model of managerial risk taking

Robert M. Wiseman, Luis Gomez-Mejia

Research output: Contribution to journalArticle

690 Citations (Scopus)

Abstract

Building on agency and prospect theory views, we construct, in this article, a behavioral agency model of executive risk taking. In the model we combine elements of internal corporate governance with problem framing to explain executive risk-taking behavior. The model suggests that executive risk taking varies across and within different forms of monitoring and that agents may exhibit risk-seeking as well as risk-averse behaviors. We develop specific propositions that combine monitoring with performance and the framing of strategic problems to explain executive choices of strategic risk. The resulting propositions enhance and extend the agency-based corporate governance literature on executive risk taking.

Original languageEnglish (US)
Pages (from-to)133-153
Number of pages21
JournalAcademy of Management Review
Volume23
Issue number1
StatePublished - Jan 1998

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Monitoring
Agency model
Risk taking
Corporate governance
Agency theory
Risk seeking
Prospect theory
Strategic risk
Risk-taking behavior
Risk-averse

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Management of Technology and Innovation
  • Strategy and Management

Cite this

A behavioral agency model of managerial risk taking. / Wiseman, Robert M.; Gomez-Mejia, Luis.

In: Academy of Management Review, Vol. 23, No. 1, 01.1998, p. 133-153.

Research output: Contribution to journalArticle

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