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    Rights statement: This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Review of Finance following peer review. The definitive publisher-authenticated version Patricia Boyallian, Pablo Ruiz-Verdú; Leverage, CEO Risk-Taking Incentives, and Bank Failure during the 2007–10 Financial Crisis, Review of Finance, Volume 22, Issue 5, 1 August 2018, Pages 1763–1805, https://doi.org/10.1093/rof/rfx051 is available online at: https://academic.oup.com/rof/article/22/5/1763/4600197

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Leverage, CEO Risk–Taking Incentives, and Bank Failure during the 2007–2010 Financial Crisis

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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Leverage, CEO Risk–Taking Incentives, and Bank Failure during the 2007–2010 Financial Crisis. / Boyallian, Patricia; Ruiz-Verdu, Pablo.
In: Review of Finance, Vol. 22, No. 5, 01.08.2018, p. 1763-1805.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Boyallian, P & Ruiz-Verdu, P 2018, 'Leverage, CEO Risk–Taking Incentives, and Bank Failure during the 2007–2010 Financial Crisis', Review of Finance, vol. 22, no. 5, pp. 1763-1805. https://doi.org/10.1093/rof/rfx051

APA

Boyallian, P., & Ruiz-Verdu, P. (2018). Leverage, CEO Risk–Taking Incentives, and Bank Failure during the 2007–2010 Financial Crisis. Review of Finance, 22(5), 1763-1805. https://doi.org/10.1093/rof/rfx051

Vancouver

Boyallian P, Ruiz-Verdu P. Leverage, CEO Risk–Taking Incentives, and Bank Failure during the 2007–2010 Financial Crisis. Review of Finance. 2018 Aug 1;22(5):1763-1805. Epub 2017 Nov 7. doi: 10.1093/rof/rfx051

Author

Boyallian, Patricia ; Ruiz-Verdu, Pablo. / Leverage, CEO Risk–Taking Incentives, and Bank Failure during the 2007–2010 Financial Crisis. In: Review of Finance. 2018 ; Vol. 22, No. 5. pp. 1763-1805.

Bibtex

@article{a5d9c0178ea24f7195987b2fba6960c6,
title = "Leverage, CEO Risk–Taking Incentives, and Bank Failure during the 2007–2010 Financial Crisis",
abstract = "Usual measures of the risk-taking incentives of bank CEOs do not capture the risk-shifting incentives that the exposure of a CEO{\textquoteright}s wealth to his firm{\textquoteright}s stock price (delta) creates in highly levered firms. We find evidence consistent with the importance of these incentives for bank CEOs: In a sample of large U.S. financial firms, a higher pre-crisis delta is associated with a significantly higher probability of failure during the 2007–2010 financial crisis in highly levered firms, but not in less levered firms.",
keywords = "executive compensation, financial crisis, risk-taking incentives, leverage, banks ",
author = "Patricia Boyallian and Pablo Ruiz-Verdu",
note = "This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Review of Finance following peer review. The definitive publisher-authenticated version Patricia Boyallian, Pablo Ruiz-Verd{\'u}; Leverage, CEO Risk-Taking Incentives, and Bank Failure during the 2007–10 Financial Crisis, Review of Finance, Volume 22, Issue 5, 1 August 2018, Pages 1763–1805, https://doi.org/10.1093/rof/rfx051 is available online at: https://academic.oup.com/rof/article/22/5/1763/4600197",
year = "2018",
month = aug,
day = "1",
doi = "10.1093/rof/rfx051",
language = "English",
volume = "22",
pages = "1763--1805",
journal = "Review of Finance",
issn = "1572-3097",
publisher = "Oxford University Press",
number = "5",

}

RIS

TY - JOUR

T1 - Leverage, CEO Risk–Taking Incentives, and Bank Failure during the 2007–2010 Financial Crisis

AU - Boyallian, Patricia

AU - Ruiz-Verdu, Pablo

N1 - This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Review of Finance following peer review. The definitive publisher-authenticated version Patricia Boyallian, Pablo Ruiz-Verdú; Leverage, CEO Risk-Taking Incentives, and Bank Failure during the 2007–10 Financial Crisis, Review of Finance, Volume 22, Issue 5, 1 August 2018, Pages 1763–1805, https://doi.org/10.1093/rof/rfx051 is available online at: https://academic.oup.com/rof/article/22/5/1763/4600197

PY - 2018/8/1

Y1 - 2018/8/1

N2 - Usual measures of the risk-taking incentives of bank CEOs do not capture the risk-shifting incentives that the exposure of a CEO’s wealth to his firm’s stock price (delta) creates in highly levered firms. We find evidence consistent with the importance of these incentives for bank CEOs: In a sample of large U.S. financial firms, a higher pre-crisis delta is associated with a significantly higher probability of failure during the 2007–2010 financial crisis in highly levered firms, but not in less levered firms.

AB - Usual measures of the risk-taking incentives of bank CEOs do not capture the risk-shifting incentives that the exposure of a CEO’s wealth to his firm’s stock price (delta) creates in highly levered firms. We find evidence consistent with the importance of these incentives for bank CEOs: In a sample of large U.S. financial firms, a higher pre-crisis delta is associated with a significantly higher probability of failure during the 2007–2010 financial crisis in highly levered firms, but not in less levered firms.

KW - executive compensation

KW - financial crisis

KW - risk-taking incentives

KW - leverage

KW - banks

U2 - 10.1093/rof/rfx051

DO - 10.1093/rof/rfx051

M3 - Journal article

VL - 22

SP - 1763

EP - 1805

JO - Review of Finance

JF - Review of Finance

SN - 1572-3097

IS - 5

ER -