This paper examines whether the risk-taking incentives induced by performance-based vesting (p-v) compensation influence bank loan contracting and credit ratings. Consistent with our risk-shifting hypothesis, we find that the p-v based compensation, as measured by the proportion of grant date...

We examine the relation between corporate governance and managerial risk-taking behavior. In light of the global financial crisis, the importance of effective governance structures in protecting claimholder interests cannot be emphasized enough. For corporate governance, we propose to include...