Abstract

http://ssrn.com/abstract=1544490
 
 

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Executive Compensation and Business Policy Choices at U.S. Commercial Banks


Robert DeYoung


University of Kansas School of Business

Emma Y. Peng


Fordham University - Accounting Area

Meng Yan


Fordham University Schools of Business

October 1, 2010


Abstract:     
This study examines whether and how the terms of CEO compensation contracts at large commercial banks between 1994 and 2006 influenced, or were influenced by, the risky business policy decisions made by these firms. We find strong evidence that bank CEOs responded to contractual risktaking incentives by taking more risk; systematic evidence that bank boards altered CEO compensation to encourage executives to exploit new growth opportunities; and more limited evidence that bank boards set CEO incentives in a manner designed to moderate excessive risk-taking. These relationships are strongest during the second half of our sample, after deregulation and technological change had expanded banks’ capacities for risk-taking, and for the largest banking companies, which are better strategically positioned to exploit these opportunities.

Number of Pages in PDF File: 55

Keywords: executive compensation, risk taking, commercial banks

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Date posted: January 31, 2010 ; Last revised: March 12, 2013

Suggested Citation

DeYoung, Robert and Peng, Emma Y. and Yan, Meng, Executive Compensation and Business Policy Choices at U.S. Commercial Banks (October 1, 2010). Available at SSRN: http://ssrn.com/abstract=1544490 or http://dx.doi.org/10.2139/ssrn.1544490

Contact Information

Robert DeYoung (Contact Author)
University of Kansas School of Business ( email )
Summerfield Hall
1300 Sunnyside Avenue
Lawrence, KS 66045
United States
785-864-1806 (Phone)
Emma Y. Peng
Fordham University - Accounting Area ( email )
1790 Broadway, 13th FL
New York, NY 10019
United States
Meng Yan
Fordham University Schools of Business ( email )
113 West 60th Street
Bronx, NY 10458
United States
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