Does Bonus Deferral Reduce Risk-Taking?

24 Pages Posted: 25 Jun 2016

See all articles by Dietmar Leisen

Dietmar Leisen

Johannes Gutenberg University Mainz - Department of Banking

Multiple version iconThere are 2 versions of this paper

Date Written: November 30, 2015

Abstract

We characterize continuous-time risk-taking and show that the introduction of deferral increases risk-taking at any time when the realized asset value is large or small. For those realized asset values in between, we derive the parameterizations of deferral for which risk-taking decreases, and discuss trade-offs in setting the deferral parameters.

Keywords: bonus, risk-taking, risk aversion, deferral ratio

Suggested Citation

Leisen, Dietmar P. J., Does Bonus Deferral Reduce Risk-Taking? (November 30, 2015). Journal of Risk, Vol. 18, No. 2, 2015. Available at SSRN: https://ssrn.com/abstract=2799719

Dietmar P. J. Leisen (Contact Author)

Johannes Gutenberg University Mainz - Department of Banking ( email )

Jakob-Welder-Weg 9
Mainz, D-55099
Germany
++49-6131-39 22097 (Phone)
++49-6131-39 23971 (Fax)

HOME PAGE: http://www.finserv.bwl.uni-mainz.de/index_ENG.php

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