Abstract
A large volume of research has examined agent risk taking and the contracting problem of risk sharing - the sharing of performance risk across agent and principal - to advance our knowledge of mechanisms that can align the assumed divergent interests and risk preferences of the managerial agent and shareholder principal. This research has been undertaken in two streams - financial economics and behavioral science - that appear to have operated in silos, using different theoretical frameworks and methodological approaches. To identify opportunities for cross-fertilization and to advance future research in both streams, we review the theoretical paradigms and empirical findings deriving from both fields. We also make an assessment of how the combined research efforts of finance and behavioral scholars have progressed in developing our understanding of agent risk taking and mechanisms for achieving agent-principal incentive alignment. Finally, we discuss how this research has influenced the corporate world for better or for worse.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 349-368 |
| Number of pages | 20 |
| Journal | Academy of Management Perspectives |
| Volume | 30 |
| Issue number | 4 |
| DOIs | |
| State | Published - Nov 1 2016 |
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ASJC Scopus subject areas
- Business and International Management
- Strategy and Management
- Marketing
Cite this
Bridging finance and behavioral scholarship on agent risk sharing and risk taking. / Martin, Geoffrey P.; Wiseman, Robert M.; Gomez-Mejia, Luis.
In: Academy of Management Perspectives, Vol. 30, No. 4, 01.11.2016, p. 349-368.Research output: Contribution to journal › Review article
}
TY - JOUR
T1 - Bridging finance and behavioral scholarship on agent risk sharing and risk taking
AU - Martin, Geoffrey P.
AU - Wiseman, Robert M.
AU - Gomez-Mejia, Luis
PY - 2016/11/1
Y1 - 2016/11/1
N2 - A large volume of research has examined agent risk taking and the contracting problem of risk sharing - the sharing of performance risk across agent and principal - to advance our knowledge of mechanisms that can align the assumed divergent interests and risk preferences of the managerial agent and shareholder principal. This research has been undertaken in two streams - financial economics and behavioral science - that appear to have operated in silos, using different theoretical frameworks and methodological approaches. To identify opportunities for cross-fertilization and to advance future research in both streams, we review the theoretical paradigms and empirical findings deriving from both fields. We also make an assessment of how the combined research efforts of finance and behavioral scholars have progressed in developing our understanding of agent risk taking and mechanisms for achieving agent-principal incentive alignment. Finally, we discuss how this research has influenced the corporate world for better or for worse.
AB - A large volume of research has examined agent risk taking and the contracting problem of risk sharing - the sharing of performance risk across agent and principal - to advance our knowledge of mechanisms that can align the assumed divergent interests and risk preferences of the managerial agent and shareholder principal. This research has been undertaken in two streams - financial economics and behavioral science - that appear to have operated in silos, using different theoretical frameworks and methodological approaches. To identify opportunities for cross-fertilization and to advance future research in both streams, we review the theoretical paradigms and empirical findings deriving from both fields. We also make an assessment of how the combined research efforts of finance and behavioral scholars have progressed in developing our understanding of agent risk taking and mechanisms for achieving agent-principal incentive alignment. Finally, we discuss how this research has influenced the corporate world for better or for worse.
UR - http://www.scopus.com/inward/record.url?scp=84998886327&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84998886327&partnerID=8YFLogxK
U2 - 10.5465/amp.2012.0134S
DO - 10.5465/amp.2012.0134S
M3 - Review article
AN - SCOPUS:84998886327
VL - 30
SP - 349
EP - 368
JO - Academy of Management Perspectives
JF - Academy of Management Perspectives
SN - 1558-9080
IS - 4
ER -