Do Lucrative Executive Pensions Make Management More Conservative?

Prasad, Rose M.
February 2008
Academy of Management Perspectives;Feb2008, Vol. 22 Issue 1, p61
Academic Journal
The article discusses how executive compensation may affect the behavior of managers. The author discusses a study by researchers Rangarajan Sundaram and David Yermack that suggests that pension plans such as deferred compensation and supplemental executive retirement plans (SERP) may encourage conservative behavior by managers to reduce debt and risk. The study also suggests that chief executive officers (CEO) are more likely to retire if pensions are vested. The author notes another study that indicates executives with pensions tied to stocks engaged in riskier investment decisions.


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