Publication: Managerial incentives to take asset risk
Managerial incentives to take asset risk
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Chesney, M., Stromberg, J., Wagner, A., & Wolff, V. L. (2020). Managerial incentives to take asset risk. Journal of Corporate Finance, 65, 101758. https://doi.org/10.1016/j.jcorpfin.2020.101758
Abstract
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We argue that incentives to take equity risk (”equity incentives”) only partially capture incentives to take asset risk (“asset incentives”). This is because leverage, while central to the theory of risk-shifting, is not explicitly considered by equity incentives. Employing measures of asset incentives that account for leverage, we find that asset risk-taking incentives can be large compared to incentives to increase firm value. Stock holdings can induce substantial risk-taking incentives, contrary to the assumption that only stock op
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- Chesney, Marc
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Citations
Chesney, M., Stromberg, J., Wagner, A., & Wolff, V. L. (2020). Managerial incentives to take asset risk. Journal of Corporate Finance, 65, 101758. https://doi.org/10.1016/j.jcorpfin.2020.101758
