The role of risk in executive compensation

Samuel R. Gray, Albert A. Cannella

Research output: Contribution to journalArticle

110 Scopus citations

Abstract

The present study was designed to investigate the role of risk in executive compensation. We argue that compensation arrangements may be used to mitigate agency problems by encouraging risk taking behavior and providing incentives for optimizing long-term performance. We examine total compensation, compensation risk, and compensation time horizon. Consistent with our theory, the evidence indicates that these dimensions vary with the financial and strategic context of the firm and with the risk-taking propensity of the CEO.

Original languageEnglish (US)
Pages (from-to)517-540
Number of pages24
JournalJournal of Management
Volume23
Issue number4
DOIs
StatePublished - Jan 1 1997

ASJC Scopus subject areas

  • Finance
  • Strategy and Management

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