Post by Sapphire Capital on Aug 28, 2008 19:52:39 GMT 4
Managerial Career Concerns and Risk Management
Jouahn Nam
Pace University - Lubin School of Business
Jun Wang
City University of New York, CUNY Baruch College - Zicklin School of Business - Department of Economics and Finance; Louisiana State University, Baton Rouge - Department of Finance
Ge Zhang
Long Island University
Journal of Risk & Insurance, Vol. 75, Issue 3, pp. 785-809, September 2008
Abstract:
We present a dynamic model of corporate risk management and managerial career concerns. We show that managers with low (high) initial reputation have high (low) career concerns about keeping their jobs and receiving all future income. These managers are more likely to speculate (hedge) early in their careers. In the later stage of their careers when managers have less career concerns, there is no speculative motive for self interested managers. On the other hand, highly reputable managers have minimal career concerns and they engage in neither hedging nor speculation early in their careers, but they may choose to hedge after poor early performance.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1202452
Jouahn Nam
Pace University - Lubin School of Business
Jun Wang
City University of New York, CUNY Baruch College - Zicklin School of Business - Department of Economics and Finance; Louisiana State University, Baton Rouge - Department of Finance
Ge Zhang
Long Island University
Journal of Risk & Insurance, Vol. 75, Issue 3, pp. 785-809, September 2008
Abstract:
We present a dynamic model of corporate risk management and managerial career concerns. We show that managers with low (high) initial reputation have high (low) career concerns about keeping their jobs and receiving all future income. These managers are more likely to speculate (hedge) early in their careers. In the later stage of their careers when managers have less career concerns, there is no speculative motive for self interested managers. On the other hand, highly reputable managers have minimal career concerns and they engage in neither hedging nor speculation early in their careers, but they may choose to hedge after poor early performance.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1202452