Abstract
The behavioral agency theory (BAM) posits that executive risk preferences are influenced by losses to their current option wealth relative to gains from their prospective option wealth. Accordingly, current option wealth attenuates risk-taking while prospective option wealth amplifies risk-taking. In the context of corporate irresponsible behaviors, this study attempts to advance BAM by theorizing how the presence of conditions that give rise to distributive and procedural injustice in CEO compensation can further amplify the positive effects of CEO prospective option wealth on risk-taking, thereby destroying stakeholder value. Our findings based on a longitudinal cross-sectional sample of 8,669 firm-year observations for the period 2001-2018 support our theorization that CEO perceptions of unfair compensation amplifies excessive risk-taking thereby increasing corporate social irresponsibility. Our study has important implications for advancing BAM and for the study and design of executive compensation.
| Original language | English |
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| Title of host publication | Proceedings of the Eighty-third Annual Meeting of the Academy of Management |
| Editors | Sonia Taneja |
| Number of pages | 1 |
| Place of Publication | Briarcliff Manor, NY |
| Publisher | Academy of Management |
| Publication date | 2023 |
| DOIs | |
| Publication status | Published - 2023 |
| Event | The Academy of Management Annual Meeting 2023: Putting the Worker Front and Center - Boston, United States Duration: 4 Aug 2023 → 8 Aug 2023 Conference number: 83 https://aom.org/events/annual-meeting/future-annual-meetings/2023-putting-the-worker-front-and-center |
Conference
| Conference | The Academy of Management Annual Meeting 2023 |
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| Number | 83 |
| Country/Territory | United States |
| City | Boston |
| Period | 04/08/2023 → 08/08/2023 |
| Internet address |
| Series | Academy of Management Annual Meeting Proceedings |
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| ISSN | 0065-0668 |