Search

Showing total 2 results
Start Over Topic finance Publication Year Range Last 3 years
2 results

1. Bank bonus pay as a risk sharing contract

Author

Harald Hau, Matthias Efing, Patrick Kampkötter, Jean-Charles Rochet, University of Zurich, Hau, Harald, Ecole des Hautes Etudes Commerciales (HEC Paris), Center for Economic Studies and Ifo for Economic Research (CESifo), CESifo Group Munich, Groupe de recherche en économie mathématique et quantitative (GREMAQ), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, and HEC Paris Research Paper

Subjects
Economics and Econometrics, History, Polymers and Plastics, Control (management), Bank compensation, 2002 Economics and Econometrics, Operating leverage, Industrial and Manufacturing Engineering, JEL: G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages, Shareholder, Accounting, 0502 economics and business, ddc:330, Risk sharing, External financing, operating leverage, Business and International Management, 050207 economics, Finance, 1402 Accounting, 050208 finance, banker compensation, Earnings, business.industry, 05 social sciences, 10003 Department of Banking and Finance, 330 Economics, Incentive, Payroll, JEL: G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G20 - General, 2003 Finance, 8. Economic growth, G20, [SHS.GESTION]Humanities and Social Sciences/Business administration, G21, business, risk sharing, bank risk, D22, bonus pay
Abstract

https://ssrn.com/abstract=3202916; We show that banker bonuses cannot be understood exclusively as incentive contracts, but also incorporate a significant risk sharing dimension between bank shareholders and bank employees. This contrasts with the conventional view whereby diversified shareholders fully insure risk averse employees. However, financial frictions imply that shareholder value is concave in a bank's cash reserves---making shareholders effectively risk averse. The optimal contract between shareholders and employees then involves some degree of risk sharing. Using extensive payroll data on 1.26 million bank employee years in the Austrian, German, and Swiss banking sectors, we show that the structure of bonus pay within and across banks is compatible with an economically significant risk sharing motive, but difficult to rationalize based on incentive theories of bonus pay only.

Published
2023

2. Investor heterogeneity and negative skewness in stock returns: Evidence from institutional investors

Author

Ramzi Benkraiem, Stéphane Goutte, Samir Saadi, Hui Zhu, Steven Zhu, Audencia Business School, SOUtenabilité et RésilienCE (SOURCE), Université de Versailles Saint-Quentin-en-Yvelines (UVSQ)-Institut de Recherche pour le Développement (IRD [France-Nord]), Paris School of Business (PSB), HESAM Université - Communauté d'universités et d'établissements Hautes écoles Sorbonne Arts et métiers université (HESAM), Université d'Ottawa [Ontario] (uOttawa), University of Ontario Institute of Technology, UOIT, Cape Breton University, CBU, University of Waterloo, UW, and ☆ The authors would like to thank Jonathan A. Batten (the Editor) and two anonymous reviewers for constructive and helpful comments. The paper has also benefited from comments and suggestions from Jason Allen, Alexander Barinov, Gregory Bauer, Imed Chkir, Lamia Chourou, Alexander David, Kose John, Yan Luo, Gordon Sick, Gloria Tian, Ligang Zhong, and seminar participants at The University of New Orleans, The University of Waterloo, The Cape Breton University, The Bank of Canada, The University of Calgary, The University of Ottawa, The Ontario Tech University, The Multinational Finance Society Annual Meetings and The Edwards Symposium on Financial Markets & Institutions.

Subjects
Economics and Econometrics, History, Polymers and Plastics, Investors’ investment horizons, [SDV]Life Sciences [q-bio], Business and International Management, Crash risk, Skewness, Finance, Industrial and Manufacturing Engineering, Institutional Investors
Abstract

International audience; We examine the relation between the probability of future stock price crash and investors’ investment horizons. Using negative skewness as a proxy for firm-specific crash risk, we document a positive association between institutional ownership and stock price crash risk. The relation is, however, driven by short-term institutional investors, while the presence of long-term institutional investors has a negative effect on stock price crash risk. In addition, we find that the presence of short-term institutional investors induces corporate risk-taking behavior. Our results are robust to alternative model specifications, endogeneity concerns, and different measures of crash risk and proxies of investors’ horizons.

Published
2022