Bankerss Compensation: Sprint Swimming in Short Bonus Pools?

Jokivuolle, Esa; Keppo, Jussi; Yuan, Xuchuan

doi:10.2139/ssrn.2346602

Cited by 10 publications

(1 citation statement)

References 62 publications

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“…Through tournaments and other competitive schemes, firms may incite employees at all levels to exhibit excessively risky behavior (Acharya et al 2016;Backes-Gellner and Pull 2013). In response to the risk-taking concerns, both regulators and firms have put forward demands for restrictive compensation measures (Jokivuolle et al 2019). However, the regulations and restrictions enacted did not always prove useful in reducing risk, and they sometimes even precipitated unintended consequences.…”

Section: Introductionmentioning

confidence: 99%

The gift that keeps on giving: corporate giving and excessive risk-taking

2021

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Corporations have recently started incorporating employees’ prosocial preferences into their incentive schemes, including charitable donations (corporate giving). These donations are mainly discussed in conjunction with the external effects of a firm’s CSR strategy. However, this experiment examines the effect of donations on internal firm operations. Specifically, we investigate whether the presence and structure of corporate giving influences employees’ excessive risk-taking. Such prosocial activities may remediate misaligned incentives often cited as drivers for employees to take excessive risks. Contrary to widespread practice, our experimental evidence suggests that firms could constrain employees' excessive risk-taking by linking existing contributions to project rather than corporate performance, thus providing boundaries around an employee’s involvement in CSR initiatives. We identify project-level giving as an unexplored CSR benefit and infer that personal responsibility effectively changes an employee’s incentive package. Our findings suggest an inverted U-shape curve of effectiveness.

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Section: Introductionmentioning

confidence: 99%

The gift that keeps on giving: corporate giving and excessive risk-taking

2021

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Evidence of Downward Real Earnings Management from Corporate Events

Hasan

2012

SSRN Journal

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Measuring Financial Stress A Country Specific Stress Index for Finland

Huotari

2015

SSRN Journal

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Bankerss Compensation: Sprint Swimming in Short Bonus Pools?

Cited by 10 publications

References 62 publications

The gift that keeps on giving: corporate giving and excessive risk-taking

The gift that keeps on giving: corporate giving and excessive risk-taking

Evidence of Downward Real Earnings Management from Corporate Events

Measuring Financial Stress A Country Specific Stress Index for Finland

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