Managerial risk aversion and the structure of executive compensation
The result's identifiers
Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216208%3A11230%2F23%3A10454469" target="_blank" >RIV/00216208:11230/23:10454469 - isvavai.cz</a>
Result on the web
<a href="https://verso.is.cuni.cz/pub/verso.fpl?fname=obd_publikace_handle&handle=YxGlbLrQwS" target="_blank" >https://verso.is.cuni.cz/pub/verso.fpl?fname=obd_publikace_handle&handle=YxGlbLrQwS</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1111/corg.12480" target="_blank" >10.1111/corg.12480</a>
Alternative languages
Result language
angličtina
Original language name
Managerial risk aversion and the structure of executive compensation
Original language description
Research question/issue We examine how chief executive officers' (CEOs) innate risk aversion influences the size and structure of their compensation contracts. In so doing, we estimate managerial risk aversion based on the Big Five personality traits-openness, conscientiousness, extraversion, agreeableness, and neuroticism-inferred using IBM's Personality Insights service. Research findings/insights We provide evidence that executives' inherent risk aversion is related to their compensation structure. Contrary to agency theory predictions, we find that more risk-averse CEOs receive more cash-based and less equity-based compensation but receive lower total compensation. This relationship is moderated by differences in firms' resource advantages. Theoretical/academic implications Despite the theoretical prediction that managerial risk aversion is a key factor determining the structure of executives' compensation contracts, there is limited empirical evidence on whether firms adjust the components of compensation based on CEOs' risk preferences. Our results help us better understand the interplay between CEO personality and executive compensation. Practitioner/policy implications This study offers important implications for organizations in that knowledge about executives' inherent risk aversion is important and relevant for designing effective compensation contracts.
Czech name
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Czech description
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Classification
Type
J<sub>imp</sub> - Article in a specialist periodical, which is included in the Web of Science database
CEP classification
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OECD FORD branch
50201 - Economic Theory
Result continuities
Project
<a href="/en/project/GA21-09231S" target="_blank" >GA21-09231S: Meta-Analyses of Returns on Financial Investment Management Strategies</a><br>
Continuities
P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)
Others
Publication year
2023
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů
Data specific for result type
Name of the periodical
Corporate Governance: an International Review
ISSN
0964-8410
e-ISSN
1467-8683
Volume of the periodical
31
Issue of the periodical within the volume
4
Country of publishing house
GB - UNITED KINGDOM
Number of pages
19
Pages from-to
563-581
UT code for WoS article
000829278300001
EID of the result in the Scopus database
2-s2.0-85134561161