ABSTRACT This study examines the risk taking properties associated with incentive plans that use relative performance evaluation, with a focus on the form of payout, whether in cash or shares. By analyzing determinants and consequences of payout form choice, I find that share-based plans offer risk-averse managers weaker incentives to pursue projects with idiosyncratic risk compared with cash plans. This occurs because share plans—unlike cash plans—expose managers to systematic performance trends, as payout values are linked to stock prices. Additionally, I document that the variation in risk taking incentives depends on expected relative performance and the strength of the incentives. Overall, this study’s findings suggest that commonly used share-based relative performance plans might not always motivate managers to pursue innovative projects with high idiosyncratic risk when projects with systematic risk are available. Data Availability: All data are available from the sources identified in the text. JEL Classifications: G30; J33; J41; M12; M41.

中文翻译：

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相对绩效计划中的现金与股票支付


摘要本研究探讨了与使用相对绩效评估的激励计划相关的风险承担特性，重点关注支付形式，无论是现金还是股票。通过分析支付形式选择的决定因素和后果，我发现与现金计划相比，基于股份的计划为规避风险的管理者提供了较弱的动力去追求具有特殊风险的项目。出现这种情况是因为股票计划（与现金计划不同）使管理者面临系统性的绩效趋势，因为派息价值与股票价格挂钩。此外，我记录了冒险激励的变化取决于预期的相对绩效和激励的强度。总体而言，本研究的结果表明，当具有系统性风险的项目可用时，常用的基于股份的相对绩效计划可能并不总能激励管理者追求具有高特殊风险的创新项目。数据可用性：所有数据均可从文本中标识的来源获得。 JEL 分类：G30； J33； J41； M12； M41。