MIT Sloan Management Review Article on Taking Stock of Corporate Risk-Taking

Boards need a greater awareness of how compensation affects decision-making.

The relationship between equity incentives for C-level executives and company performance has received enormous attention due to the cost to shareholders of the compensation awarded to top executives. An often neglected — but potentially more important — question is whether equity incentives influence executives’ risk-taking in ways that are detrimental to the company.

About the Author

Vincent O’Connell is a professor of accounting at Cork University Business School (CUBS) at University College Cork in Ireland. Don O’Sullivan is an associate professor of marketing at Melbourne Business School at the University of Melbourne in Australia. Jong-Ho Lee is a professor of marketing at Korea University Business School (KUBS) at Korea University in Seoul, South Korea.

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