Book
Seeking Alpha [electronic resource]: Excess Risk Taking and Competition for Managerial Talent
NBER working paper series, Cambridge, Mass. National Bureau of Economic Research 2013
2013
Abstract
We present a model in which managers are risk-averse and firms compete for scarce managerial talent (“alphaâ€). When managers are not mobile across firms, firms provide efficient compensation, which allows for learning about managerial talent and for insurance of low-quality managers. When instead managers can move across firms, firms cannot offer co-insurance among employees. In anticipation, risk-averse managers may churn across firms or undertake aggregate risks in order to delay the revelation of their true quality. The result is excessive risk-taking with pay for short-term performance and an accumulation of long-term risks. We conclude with a discussion of policies to address the inefficiency in compensation.
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Details
- Title
- Seeking Alpha [electronic resource]: Excess Risk Taking and Competition for Managerial Talent
- Creators
- Viral V AcharyaMarco PaganoPaolo VolpinNational Bureau of Economic Research
- Series
- NBER working paper series
- Publisher
- Cambridge, Mass. National Bureau of Economic Research 2013
- Resource Type
- Book
- Language
- English
- Academic Unit
- Finance
- Identifiers
- 991021862313604721