We examine changes to executive compensation contracts in the presence of excessive risk-taking. Prior research has linked option-based compensation with risk taking and aggressive financial reporting, which is observed following earnings restatements. We further this literature by examining excessive risk-taking, using measures of CEOs' continued holding of exercisable options and high levels of R&D. Using a large sample of firms from 1994-2008; we find that these characteristics have a negative association with future option grants. However, we find that the ability of the compensation committee to detect and respond to excessive risk-taking is mitigated in the presence of aggressive financial reporting.
| Speaker: | Dr Lisa GOH Lecturer, London School of Economics & Political Science |
| When: |
2.00 pm - 3.30 pm |
| Venue: | School of Accountancy [Map] Level 4, Meeting Room 4.1 |
| Contact: | Office of the Dean Email: SOAR@smu.edu.sg |