Remuneration and Risk-Taking – Empirical Evidence for Social Trading

2013 ◽  
Author(s):  
Sascha Neumann ◽  
Stephan Paul ◽  
Philipp Doering
Keyword(s):  
Empirical Evidence ◽  
Risk Taking

Stock and Option Proportions in Executive Compensation

2011 ◽  
Vol 01 (01) ◽  
pp. 169-203 ◽  
Author(s):  
Phelim P. Boyle ◽  
Ranjini Jha ◽  
Shannon Kennedy ◽  
Weidong Tian
Keyword(s):  
Executive Compensation ◽  
Empirical Evidence ◽  
Risk Taking ◽  
Principal Agent ◽  
Optimal Contract ◽  
Efficient Mechanism ◽  
Opposite Conclusion

There is controversy about the relative merits of stock and options in executive compensation. Some observers contend that stock is a more efficient mechanism, while others reach the opposite conclusion. We focus on the manager's risk-taking incentives and derive an optimal compensation contract by using the concept of a comparable benchmark and imposing a volatility constraint in a principal-agent framework. We demonstrate a joint role for both stock and options in the optimal contract. We show that firms with higher volatility should use more options in compensating their executives and provide empirical evidence supporting this testable implication.

Aging Population, Retirement, and Risk Taking: Reply

2020 ◽  
Vol 66 (6) ◽  
pp. 2796-2799
Author(s):  
Haim Levy
Keyword(s):  
Empirical Evidence ◽  
Risk Taking ◽  
Geometric Mean ◽  
Aging Population ◽  
The Other ◽  
Investment Horizon ◽  
Technical Error ◽  
Long Run ◽  
Original Theorem

In theorem 1 given in my paper, “Aging Population, Retirement, and Risk Taking” [Levy H (2016a) Aging population, retirement, and risk taking. Management Sci. 62(5):1415–1430.], there is indeed a technical error. Yet, adding one condition to the theorem (which can be added in two alternate ways) is sufficient to ensure the dominance of stocks over bonds in the very long run. For the commonly employed preferences, the empirical evidence conforms with the claim given in my original theorem 1, asserting that the portfolio with the higher geometric mean (stocks) dominates the other portfolio under consideration (bonds) as the investment horizon increases indefinitely. Thus, as advocated in my paper, stocks dominate bonds for investors with typical preferences who save for retirement. This paper was accepted by Karl Deither, finance.

Sign in / Sign up

Export Citation Format

Share Document