The role of risk in executive compensation

Samuel R. Gray, Albert A. Cannella

Research output: Contribution to journalArticle

105 Citations (Scopus)

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
StatePublished - 1997
Externally publishedYes

Fingerprint

Executive compensation
Time horizon
Long-term performance
Incentives
Agency problems
Propensity
Risk-taking behavior
Chief executive officer
Risk taking

ASJC Scopus subject areas

  • Strategy and Management
  • Finance

Cite this

Gray, S. R., & Cannella, A. A. (1997). The role of risk in executive compensation. Journal of Management, 23(4), 517-540.

The role of risk in executive compensation. / Gray, Samuel R.; Cannella, Albert A.

In: Journal of Management, Vol. 23, No. 4, 1997, p. 517-540.

Research output: Contribution to journalArticle

Gray, SR & Cannella, AA 1997, 'The role of risk in executive compensation', Journal of Management, vol. 23, no. 4, pp. 517-540.
Gray SR, Cannella AA. The role of risk in executive compensation. Journal of Management. 1997;23(4):517-540.
Gray, Samuel R. ; Cannella, Albert A. / The role of risk in executive compensation. In: Journal of Management. 1997 ; Vol. 23, No. 4. pp. 517-540.
@article{d34bc504f0d540e2b7878609346944b5,
title = "The role of risk in executive compensation",
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.",
author = "Gray, {Samuel R.} and Cannella, {Albert A.}",
year = "1997",
language = "English (US)",
volume = "23",
pages = "517--540",
journal = "Journal of Management",
issn = "0149-2063",
publisher = "SAGE Publications Inc.",
number = "4",

}

TY - JOUR

T1 - The role of risk in executive compensation

AU - Gray, Samuel R.

AU - Cannella, Albert A.

PY - 1997

Y1 - 1997

N2 - 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.

AB - 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.

UR - http://www.scopus.com/inward/record.url?scp=0031537107&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=0031537107&partnerID=8YFLogxK

M3 - Article

VL - 23

SP - 517

EP - 540

JO - Journal of Management

JF - Journal of Management

SN - 0149-2063

IS - 4

ER -