Deregulation and the relationship between bank CEO compensation and risk taking
By: Elijah Brewer III, William Curt Hunter, William Jackson III.
Contributors: Hunter, W. Curt; Jackson, William E., 1953-
Series: Working paper series ;; WP-2003-32; Working paper series (Federal Reserve Bank of Chicago. Research Dept. : Online) ;; WP-2003-32.
Publisher: Federal Reserve Bank of Chicago
Published: 2003
Place of publication: [Chicago, Ill.]
Language: eng
Format: Electronic resource
Description: "The deregulation of the banking industry during the 1990s provides a natural (public policy) experiment for investigating how firms adjust their executive compensation contracts as the environment in which they operate becomes relatively more competitive.  Using the Riegle-Neal Act of 1994 as a focal point, we investigate how banks changed the equity-based component of bank CEO compensation contracts.  We also examine the relationships between equity- based compensation and risk, capital structure, and investment opportunity set.  Consistent with theoretical predictions, we find that after deregulation, the equity- based component of bank CEO compensation increases significantly on average for the industry.  Additionally, we find that more risky banks have significantly higher levels of equity-based compensation, as do banks with more investment opportunities.  But, more levered banks do not have higher levels of equity-based CEO compensation.  Finally, we observe that most of these relationships become more powerful in our post- deregulation period"--Federal Reserve Bank of Chicago web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 9/30/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.