The impact of executive characteristics, compensation and institutional context on organizational behavior and performance: an integrated study in the banking industry
01/10/2012 - 30/09/2015
Abstract
Do banks’ risk-taking behavior and performance differ depending on their executives? That is the question that guides this project. We study the impact of bank executives’ characteristics, such as tenure and personality, on their risk-related attention patterns and the subsequent impact on banks’ risk-taking behavior, such as their investment in mortgage-backed securities.
The project is divided into three subtopics. First, we explore the effect of executive compensation. For instance, what is the impact of pay arrangements, such as stock options, on executives’ risk-related attention? Do executive characteristics and compensation interact in affecting these attention patterns? Second, we study how banks’ executives learn from feedback; i.e., how they adapt attention patterns following positive or negative performance, and how this learning behavior is affected by executive characteristics and compensation. The third subtopic concerns the banks’ institutional context. We investigate whether, because of their underlying socioeconomic differences, corporate governance policies (i.e., Anglo-Saxon versus Rhine/Latinic models) affect risk-related executive attention patterns differently.
In sum, we present a comprehensive and innovative framework to uncover the antecedents and consequences of banks’ risk-taking behavior. We aim to perform high-quality fundamental research that extends various literature streams and at the same time informs and fascinates non-academic audiences.
Funding(s)
FWO
Researcher(s)
Principal investigator: Boone Christophe
Fellow: Buyl Tine
Research team
ACED/Management