We examine the relation between managerial bonus plans and firms` derivatives usage.
The typical bonus plan payoff has a convex and a concave region. This gives managers
opposing incentives to increase or decrease risk in order to maximize bonus
payments.
Partitioning the sample into firms whose managers are more likely to face convex or
concave regions allows us to separate these opposing incentives. We find a negative
relation between bonus plans and derivatives usage for firms in the convex region
and a positive relation for firms in the concave region. Our results support the
predictions of Smith and Stulz (1985).
학회소식
공지사항
[2003년 제 2차] The Effect of the Convexity and Concavity of Manage
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게시일 :
2003-07-12