The Impact of Risk on CEO Equity Incentives: Evidence from Customer Concentration

59 Pages Posted: 14 Oct 2011 Last revised: 20 Jun 2014

See all articles by Ana M. Albuquerque

Ana M. Albuquerque

Boston University - Questrom School of Business

George Papadakis

Boston University

Peter D. Wysocki

Boston University Questrom School of Business

Date Written: April 11, 2014

Abstract

This paper provides new empirical insights on the association between a firm’s operating structure and the level of CEO equity incentives. We investigate a sample of supplier firms that rely on a few large customers for a significant fraction of their revenues. We predict that suppliers with a higher customer concentration face higher idiosyncratic risk and, as a result, rely less on equity-based managerial incentive compensation contracts. Our empirical results support these predictions.

Keywords: CEO, Compensation, Major Customers, Incentives, Risk, Suppliers

JEL Classification: G30, D81, M40

Suggested Citation

Albuquerque, Ana M. and Papadakis, George and Wysocki, Peter D., The Impact of Risk on CEO Equity Incentives: Evidence from Customer Concentration (April 11, 2014). Available at SSRN: https://ssrn.com/abstract=1944015 or http://dx.doi.org/10.2139/ssrn.1944015

Ana M. Albuquerque (Contact Author)

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
617-358-4185 (Phone)
617-353-6667 (Fax)

George Papadakis

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Peter D. Wysocki

Boston University Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

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