Applications of fixed effect models to managerial risk-taking incentives

Yin Siang Huang, Cheng Few Lee, Chih Yung Lin*


研究成果: Review article同行評審


In this paper, we first review the finance literature on managerial risk-taking incentives that is based on various fixed effect models (FEs). Second, we discuss the differences between industry and firm FEs with overall-, between-, and within-variations in corporate policies. Third, we investigate the effect of managerial risk-taking incentives on the values and decisions of firms as examples to support the discussion. Following Coles, Daniel, and Naveen (2006), we use Vega to measure the incentives. Our empirical results except for R&D expenditures show that a firm FE provides results consistent with other studies when we examine the effect of Vega on the values and decisions of firms. The evidence supports the idea that firms with high Vegas may have low values and capital expenditures, and high leverages and high payouts.

頁(從 - 到)249-261
期刊Quarterly Review of Economics and Finance
出版狀態Published - 12月 2023


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