Abstract
Employing survey and archival data from a sample of IPO firms, and extending the ideas of the Behavioral Agency Model, this study examines the influence of various forms of risk bearing created within the compensation contract on perceived risk taking. The results show that employment risk and variability in compensation each corresponds to greater risk taking, while downside risk and the intrinsic value of stock options correspond to lower risk taking. Among the implications from these results are the importance CEOs attach to relatively stable forms of pay, and to drawing distinctions between the potential for loss of pay and uncertainty about the amount of future pay.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1001-1019 |
| Number of pages | 19 |
| Journal | Strategic Management Journal |
| Volume | 28 |
| Issue number | 10 |
| DOIs | |
| State | Published - Oct 2007 |
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Keywords
- Behavioral agency model
- Executive compensation
- Risk bearing
- Risk taking
ASJC Scopus subject areas
- Business and International Management
- Strategy and Management
Cite this
Disentangling compensation and employment risks using the behavioral agency model. / Larraza-Kintana, Martin; Wiseman, Robert M.; Gomez-Mejia, Luis; Welbourne, Theresa M.
In: Strategic Management Journal, Vol. 28, No. 10, 10.2007, p. 1001-1019.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Disentangling compensation and employment risks using the behavioral agency model
AU - Larraza-Kintana, Martin
AU - Wiseman, Robert M.
AU - Gomez-Mejia, Luis
AU - Welbourne, Theresa M.
PY - 2007/10
Y1 - 2007/10
N2 - Employing survey and archival data from a sample of IPO firms, and extending the ideas of the Behavioral Agency Model, this study examines the influence of various forms of risk bearing created within the compensation contract on perceived risk taking. The results show that employment risk and variability in compensation each corresponds to greater risk taking, while downside risk and the intrinsic value of stock options correspond to lower risk taking. Among the implications from these results are the importance CEOs attach to relatively stable forms of pay, and to drawing distinctions between the potential for loss of pay and uncertainty about the amount of future pay.
AB - Employing survey and archival data from a sample of IPO firms, and extending the ideas of the Behavioral Agency Model, this study examines the influence of various forms of risk bearing created within the compensation contract on perceived risk taking. The results show that employment risk and variability in compensation each corresponds to greater risk taking, while downside risk and the intrinsic value of stock options correspond to lower risk taking. Among the implications from these results are the importance CEOs attach to relatively stable forms of pay, and to drawing distinctions between the potential for loss of pay and uncertainty about the amount of future pay.
KW - Behavioral agency model
KW - Executive compensation
KW - Risk bearing
KW - Risk taking
UR - http://www.scopus.com/inward/record.url?scp=34548460619&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=34548460619&partnerID=8YFLogxK
U2 - 10.1002/smj.624
DO - 10.1002/smj.624
M3 - Article
AN - SCOPUS:34548460619
VL - 28
SP - 1001
EP - 1019
JO - Strategic Management Journal
JF - Strategic Management Journal
SN - 0143-2095
IS - 10
ER -