CEO risk-taking incentives and bank failure during the 2007-2010 financial crisis

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dc.contributor.author Boyallian, Patricia
dc.contributor.author Ruiz-Verdú, Pablo
dc.contributor.editor Universidad Carlos III de Madrid. Departamento de Economía de la Empresa
dc.date.accessioned 2015-03-16T15:47:57Z
dc.date.accessioned 2015-04-07T08:11:20Z
dc.date.available 2015-04-07T08:11:20Z
dc.date.issued 2015-03
dc.identifier.issn 2387-175X
dc.identifier.uri http://hdl.handle.net/10016/20279
dc.description.abstract We propose a simple measure of the risk-taking incentives of the CEOs of highly levered financial institutions, levered delta, which captures the incentives to take on risk generated by CEOs' stock holdings. Using this measure, we find that stronger CEO risk-taking incentives prior to the 2007-2010 financial crisis are associated with a higher probability of bank failure during the crisis. We find no evidence that risk-taking incentives or bank failure are related to corporate governance failures. However, CEOs' risk-taking incentives appear to be aligned with shareholders' incentivesto shift risk to other claim holders.
dc.description.sponsorship The authors acknowledge the financial support of Spain's Ministry of Science and Innovation (through research grant ECO2009-08278), Spain's Ministry of Economy and Competitiveness (through grant ECO2012-33308) and of Fundación UCEIF (through a Santander Financial Institute (2013) research grant.)
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries UC3M Working Papers Business
dc.relation.ispartofseries 15-01
dc.rights Atribución-NoComercial-SinDerivadas 3.0 España
dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.other Executive compensation
dc.subject.other Risk-taking incentives
dc.subject.other Leverage
dc.subject.other Risk shifting
dc.subject.other Bank governance
dc.subject.other Financial crisis
dc.title CEO risk-taking incentives and bank failure during the 2007-2010 financial crisis
dc.type workingPaper
dc.rights.accessRights openAccess
dc.relation.projectID Gobierno de España. ECO2009-08278
dc.relation.projectID Gobierno de España. ECO2012-33308
dc.identifier.uxxi DT/0000001349
dc.identifier.repec wb1501
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