CEO compensation and banks’ risk-taking during pre and post financial crisis periods

Syed Zulfiqar Ali Shah, Saeed Akbar, Jia Liu, Ziyu Liu, Sichen Cao

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

Abstract

This study examines the impact of CEO compensation on banks’ risk during both pre and post-financial crisis periods. Our results suggest a negative relationship between CEO bonuses and banks’ risk in the pre-financial crisis period. Similarly, restricted shares and options granted to CEOs in the post-financial crisis period also appear to decrease banks’ risk. In contrast, we observe a positive influence of the Troubled Asset Relief Program (TARP) on banks’ risk. Our results also show that the length of time to maturity of options influences banks’ risk-taking behavior. Our findings have useful implications for formulating and regulating CEO compensation structure.

Original languageEnglish
Pages (from-to)1489-1503
Number of pages15
JournalResearch in International Business and Finance
Volume42
Early online date8 Jul 2017
DOIs
Publication statusPublished - 1 Dec 2017
Externally publishedYes

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