Do U.S. Insurance Firms Offer the “Wrong” Incentives to Their Executives?
研究了1992至2007年美国上市保险公司的高管薪酬与市场隐含违约风险的关系，发现股票期权激励会增加未来违约风险，可能损害股东利益。
Abstract We examine the relation between executive compensation and market‐implied default risk for listed insurance firms from 1992 to 2007. Shareholders are expected to encourage managerial risk sharing through equity‐based incentive compensation. We find that long‐term incentives and other share‐based plans do not affect the default risk faced by firms. However, the extensive use of stock options leads to higher future default risk for insurance firms. We argue that this is because option‐based incentives induce managerial risk‐taking behavior, which seeks to maximize managerial payoff through equity volatility. This could be detrimental to the interests of shareholders, especially during a financial crisis.