Managerial Career Concerns and Risk Management

Jouahn Nam, Jun Wang and Ge Zhang
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Jouahn Nam: Pace University
Jun Wang: Baruch College
Ge Zhang: University of New Orleans

No 2005-10, Working Papers from University of New Orleans, Department of Economics and Finance

Abstract: We present a dynamic model of corporate risk management and managerial career concerns. We show that managers with high (low) career concerns are more likely to speculate (hedge) early in their careers. In the later stage of their careers when managers have less career concerns, there is no speculative motive for self interested managers. On the other hand, managers with minimal career concerns engage in neither hedging nor speculation early in their careers, but they may choose to hedge after poor early performance.

Keywords: Risk management; Dynamic model; Hedging; Speculation (search for similar items in EconPapers)
JEL-codes: C73 G34 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2005
New Economics Papers: this item is included in nep-bec, nep-fin, nep-fmk and nep-rmg
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