汇报: Stocks or Options: Risk Choices and Compensation Design

汇报人：Bo Sun（Guanghua School of Management，Peking University）

功夫：9月27日（周二）10:00-11:30am

地址：拉斯维加斯9888新楼216教室

提要：We analyze the impact of the existence of bad-tail risks on the decision to pay managers in stock or in options and find that, contrary to conventional wisdom that options incent higher risk-taking, options are often a superior vehicle for limiting managerial incentives to take bad-tail risks. Though options have not been the dominant form of compensation in the financial services industry in recent years,options are optimal under a condition similar to second-order stochastic dominance.Conventional call options can incent the desired project choice under some dominance circumstances, but arrangements like collar option strategies can do so in a wide variety of circumstances. Shareholder mistakes in choosing vehicles for executive compensation may have contributed to executives’incentives to take tail risks.

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