We analyze the impact of incentive mechanisms embedded in executive remuneration contracts on the risk choices made by bank CEOs. For a panel of US and European banks, we employ the Merton distance to default model to estimate how bonus payments and option holdings impact the level of bank...

We explore the role of cultural heritage in explaining CEOs overconfidence and its impact on the propensity and performance of corporate acquisitions. CEOs are more prone to overconfidence if the culture in their ancestral country of origin is characterized by strong individualism, independence,...

Widespread losses during the recent financial crisis have increased concerns that equity-based compensation for bank CEOs causes excessive risk-taking by banks. Debt-based compensation, so-called inside debt, aligns the interests of CEOs with those of external creditors. We examine whether...