This study explores the relationship between executive compensation and the preference dynamics of managers and shareholders. Our analysis centers on the theoretical prediction that changes in firms' asset value can differentially affect the risk-taking preferences of the two groups, potentially influencing the optimal compensation policy. Utilizing local real estate price changes to identify variations in firms’ asset value, we find that a decrease in asset value leads to more risk-taking incentives in compensation, and this effect is more pronounced in firms that are more likely to be influenced by the hypothesized mechanisms. In the second empirical setting, we provide corroborating evidence using a natural experiment involving disaster-induced negative shocks to the firm fundamentals. Collectively, our findings suggest that the design of compensation contracts facilitates incentive alignment by incorporating the dynamic preferences of the contracting parties.

中文翻译：

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偏好动态和冒险激励


本研究探讨了高管薪酬与管理者和股东的偏好动态之间的关系。我们的分析集中在理论预测上，即公司资产价值的变化会对两组的风险偏好产生不同的影响，从而可能影响最优薪酬政策。利用当地房地产价格的变化来识别企业资产价值的变化，我们发现资产价值的下降会导致薪酬方面更多的冒险激励，并且这种效应在更可能受到资产价值影响的企业中更为明显。假设的机制。在第二个实证背景中，我们使用自然实验提供了确凿的证据，该实验涉及灾难对公司基本面造成的负面冲击。总的来说，我们的研究结果表明，薪酬合同的设计通过纳入缔约方的动态偏好来促进激励调整。