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 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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