Affiliation:
1. Queensland University of Technology
2. The University of Adelaide
Abstract
ABSTRACTThe standard principal-agent model predicts that, ceteris paribus, a negative relation exists between firm risk and CEO incentives or pay-performance sensitivity. We examine how a CEO’s risk tolerance (captured by national culture) affects pay-performance sensitivity using international data from 29 countries. We find that CEOs from countries with high (low) risk tolerance are associated with high (low) pay-performance sensitivity, suggesting that they require a low (high) risk premium. We contribute to the CEO compensation literature by introducing CEO risk tolerance, an overlooked factor, into CEO compensation contracts.
Publisher
American Accounting Association
Subject
Accounting,Business and International Management
Cited by
1 articles.
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1. The Future of National Culture in Accounting Research;Journal of International Accounting Research;2024-06-15