Finance Seminar with Chang Mo Kang, The University of Texas at Austin

Upcoming Finance Seminar with Chang Mo Kang, The University of Texas at Austin

 
Onsdag, 15 januar, 2014 - 11:00 to 12:15

The Department of Finance is proud to announce the upcoming seminar with Chang Mo Kang, The University of Texas at Austin.

Chang Mo Kang will present: 

Executive Compensation, Board Compensation, and Managerial Risk-Seeking Activities

 

Abstract:

I examine the design of board compensation in a setting in which shareholders delegate to the board the tasks of monitoring managers and setting managerial pay. While high performance-based board compensation induces the board to monitor the firm and to properly design managerial compensation, it also provides the board with incentives to misreport managerial risk-seeking activities and to engage in collusive behavior with the manager at the expense of shareholders. From this trade-off, I develop a number of testable hypotheses and take them to data. Consistent with the model's implications, I find that firms in which (i) managerial risk-seeking activities are more likely to occur (e.g., high R&D firms or banks), (ii) board monitoring costs are likely to be lower (e.g., firms that have non-officer blockholders on the board) and (iii) their projects can exhibit a large variability in quality (e.g., larger or more diversified firms) tend to award higher pay-for-performance compensation to their managers and lower pay-for-performance compensation to their boards.

Sidst opdateret: Department of Finance // 20/07/2018