SavedAdd your journal

Journals / International Review of Economics and Management / 2016 / Cilt: 4 - Sayı: 1

INCENTIVE ROOTS OF MANAGERIAL (EXCESSIVE) RISK TAKING AND AN ASSESMENT OF POLICY RESPONSES

Sadettin Haluk ÇİTÇİ
Pages
29–44
Publication Date
2016-04-07
DOI
—
🏛️Bibliographic metadata and full text access for this article are provided via DergiPark.
DergiPark Record ↗
✨

AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

The paper also assesses main policy responses against excessive risk taking and concludes that current policies centered on fixing contractual schemes are not adequate to fix these incentive problems.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:There are many incentive factors affecting managers’ risk appetite.
📊
Key Findings & Data:This study reviews the incentive literature and analyses arguments highlighting the impact of implicit and explicit incentives on managerial risk taking and the results of empirical studies on the issue.
💡
Conclusion & Impact:The paper also assesses main policy responses against excessive risk taking and concludes that current policies centered on fixing contractual schemes are not adequate to fix these incentive problems.
🔬Design:Review & Systematic Survey
📍Scope:Comprehensive Sample
⚙️Variables:Incentives · Risk taking · Investment

Abstract

There are many incentive factors affecting managers’ risk appetite. This study reviews the incentive literature and analyses arguments highlighting the impact of implicit and explicit incentives on managerial risk taking and the results of empirical studies on the issue. The paper also assesses main policy responses against excessive risk taking and concludes that current policies centered on fixing contractual schemes are not adequate to fix these incentive problems.

Özet

There are many incentive factors affecting managers’ risk appetite. This study reviews the incentive literature and analyses arguments highlighting the impact of implicit and explicit incentives on managerial risk taking and the results of empirical studies on the issue. The paper also assesses main policy responses against excessive risk taking and concludes that current policies centered on fixing contractual schemes are not adequate to fix these incentive problems.

🔖

Cite This Article

ÇİTÇİ, S. H. (2016). INCENTIVE ROOTS OF MANAGERIAL (EXCESSIVE) RISK TAKING AND AN ASSESMENT OF POLICY RESPONSES. International Review of Economics and Management, Cilt: 4 - Sayı: 1, 29–44. https://ajindex.com/articles/769719

📄 Full Text PDF Viewer

📄

PDF görüntüleyici hazırlanıyor...

References (17)

  1. Adams, R., & Ferreira, D. 2007. A Theory of Friendly Boards. Journal of Finance, 62: 217-250.
  2. Agrawal, Anup, & Mandelker, G. 1987. Managerial Incentives and Corporate Investment and Financing Decisions. Journal of Finance, 42: 823-837.
  3. Avery, C., & Chevalier, J. 1999. Herding Over the Career. Economics Letters, 53: 327-333.
  4. Bebchuk, L., & Spamann, H. 2010. Regulating Bankers' Pay. Georgetown Law Journal, 98: 247-287.
  5. Blinder, A. 2009. Crazy Compensation and the Crisis. The Wall Street Journal, May 28: A15. Boyson, N. 2003. Why Do Experienced Hedge Fund Managers Have Lower Returns? Working Paper. Boyson, N. 2010. Implicit Incentives and Reputational Herding By Hedge Fund Managers. Journal of Empirical Finance, 17: 283-299.
  6. Bushman, R., Dai, Z., & Wang, X. 201.0 Risk and Ceo Turnover. Journal of Financial Economics, 96: 381-398.
  7. Carpenter, J. 2000. Does Option Compensation Increase Managerial Risk Appetite? The Journal of Finance, 55: 2311-2331.
  8. Cheng, I., Hong, H., & Scheinkman, J. 2010. Yesterday's Heroes: Compensation and Creative Risk-Taking. Working Paper. Chevalier, J., & Ellison, G. 1997. Risk Taking By Mutual Funds As A Response To Incentives. Journal of Political Economy, 105: 1167-1200.
  9. Citci, S., & Inci, E. (forthcoming) The Masquerade Ball of Ceos and Mask of Excessive Risk Taking. Economic Modelling. Coles, J., Daniel, N., and Naveen, L. 2006. Managerial Incentives and Risk-Taking. Journal of Financial Economics, 79: 431-468.
  10. Coughlan, A., & Schmidt, R. 1985.
  11. Executive Compensation, Management Turnover, and Firm Performance. Journal of Accounting and Economics, 7: 43-66.
  12. Dasgupta, A., & Prat, A. 2006. Financial Equilibrium with Career Concerns. Theoretical Economics, 1: 67-93.
  13. Defond, M., & Park, C. 1999. The Effect of Competition on Ceo Turnover. Journal of Accounting and Economics, 27: 35-36.
  14. Diane, D., & Tkac, T. 2002. The Determinants of the Flow of Funds of Managed Portfolios: Mutual Funds Vs. Pension Funds. Journal of Financial and Quantitative Analysis, 37: 523-557.
  15. Falato, A., Li, D., & Milbourn, T. 2011. To Each According to His Ability? Ceo Pay and the Market for Ceos, Working Paper. Fama, E. 1980. Agency Problems and the Theory of the Firm. Journal of Political Economy, 88: 288-307.
  16. Froot, K., Perold A., & Stein, J. 1992. Shareholder Trading Practices and Corporate Investment Horizons. Journal of Applied Corporate Finance, 5: 42-58.
  17. Frydman, C., & Jenter, D. 2010. Ceo Compensation. Working Paper. Gibbons, R., & Murphy, K. 1990. Relati