The DOI matches its Crossref record; 2 of the 2 references it cites were found in a registry or an index.
The sensitivity of CEO wealth to equity risk: an analysis of the magnitude and determinants
Open accessAbstract
To control risk-related incentive problems, equity holders are expected to manage both the convexity and slope of the relation between firm performance and managers’ wealth. I find stock options, but not common stockholdings, significantly increase the sensitivity of CEOs’ wealth to equity risk. Cross-sectionally, this sensitivity is positively related to firms’ investment opportunities. This result is consistent with managers receiving incentives to invest in risky projects when the potential loss from underinvestment in valuable risk-increasing projects is greatest. Firms’ stock-return volatility is positively related to the convexity provided to managers, suggesting convex incentive schemes influence investing and financing decisions.
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Citations
Cites
The pricing of options and corporate liabilities
Black, F., & Scholes, M. (1973) · Journal of Political Economy · doi:10.1086/260062 · Cited by 29,074
Determinants of corporate borrowing
Myers, S. C. (1977) · Journal of Financial Economics · doi:10.1016/0304-405x(77)90015-0 · Cited by 13,169
Cited by
The role of information and financial reporting in corporate governance and debt contracting
Armstrong, C. S., Guay, W. R., & Weber, J. P. (2010) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2010.10.001 · Cited by 1,494
Self-citationThe use of equity grants to manage optimal equity incentive levels
Core, J., & Guay, W. (1999) · Journal of Accounting and Economics · doi:10.1016/s0165-4101(99)00019-1 · Cited by 1,456
Self-citationStrong boards, CEO power and bank risk-taking
Pathan, S. (2009) · Journal of Banking & Finance · doi:10.1016/j.jbankfin.2009.02.001 · Cited by 1,031
Women on board: Does boardroom gender diversity affect firm risk?
Sila, V., Gonzalez, A., & Hagendorff, J. (2016) · Journal of Corporate Finance · doi:10.1016/j.jcorpfin.2015.10.003 · Cited by 804
Role of Managerial Incentives and Discretion in Hedge Fund Performance
AGARWAL, V., DANIEL, N. D., & NAIK, N. Y. (2009) · The Journal of Finance · doi:10.1111/j.1540-6261.2009.01499.x · Cited by 688
Metadata
- Authors
- Guay, W. R.
- Venue
- Journal of Financial Economics
- Publisher
- Elsevier BV
- Published
- 1999-07
- Volume
- 53
- Issue
- 1
- Pages
- 43-71
- ISSN
- 0304-405X (ISSN-L)
- OpenAlex
- W2004601982
- Cited by
- 1,388
- References
- 2
- FWCI
- 57.76
- Type
- journal article
- Language
- en
- Open access
- hybrid
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- Guay, W. R. (1999). The sensitivity of CEO wealth to equity risk: an analysis of the magnitude and determinants. Journal of Financial Economics. https://doi.org/10.1016/s0304-405x(99)00016-1
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
