Disentangling compensation and employment risks using the behavioral agency model

Martin Larraza‐Kintana, Robert M. Wiseman, Luis R. Gomez‐Mejia and Theresa M. Welbourne

Strategic Management Journal, 2007, vol. 28, issue 10, 1001-1019

Abstract: Employing survey and archival data from a sample of IPO firms, and extending the ideas of the Behavioral Agency Model, this study examines the influence of various forms of risk bearing created within the compensation contract on perceived risk taking. The results show that employment risk and variability in compensation each corresponds to greater risk taking, while downside risk and the intrinsic value of stock options correspond to lower risk taking. Among the implications from these results are the importance CEOs attach to relatively stable forms of pay, and to drawing distinctions between the potential for loss of pay and uncertainty about the amount of future pay. Copyright © 2007 John Wiley & Sons, Ltd.

Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (41)

Downloads: (external link)
https://doi.org/10.1002/smj.624

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:stratm:v:28:y:2007:i:10:p:1001-1019

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0143-2095

Access Statistics for this article

More articles in Strategic Management Journal from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().