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Full-Text Articles in Business Administration, Management, and Operations
Not All Risk Is Born Equal: The Behavioral Agency Model & Firm Efficacy, Geoffrey P. Martin Dr, Nathan T. Washburn Dr, Marianna Makri Dr
Not All Risk Is Born Equal: The Behavioral Agency Model & Firm Efficacy, Geoffrey P. Martin Dr, Nathan T. Washburn Dr, Marianna Makri Dr
Geoffrey P Martin
We examine the relationship between agent (CEO) risk bearing and the quality of executive risk taking outcomes, by examining the contingency effect of CEO perceived firm efficacy. In doing so, we extend the behavioral agency model (BAM) beyond predictions of risk magnitude to examining how CEO risk taking outcomes differ qualitatively in response to risk bearing. We argue that CEO risk bearing (due to stock options or cash compensation) will positively influence performance outcomes in the presence of higher perceived firm efficacy. However, this positive influence reverses when efficacy is lower. We demonstrate the utility of firm efficacy in exploring …
Executive Stock Options As Mixed Gambles: Re-Visiting The Behavioral Agency Model, Geoffrey P. Martin, Robert M. Wiseman, Luis Gomez-Mejia
Executive Stock Options As Mixed Gambles: Re-Visiting The Behavioral Agency Model, Geoffrey P. Martin, Robert M. Wiseman, Luis Gomez-Mejia
Geoffrey P Martin
Conceiving of stock options as providing the CEO with cues for the possibility of both greater prospective wealth and losses to current wealth, we re-visit predictions of the behavioral effects of equity based pay using the Behavioral Agency Model (BAM). We refine BAM’s original formulation and provide an explanation for previous conflicting empirical results by theorizing that the anticipation of prospective wealth attenuates the negative effect of accumulated current equity wealth upon CEO strategic risk taking. In doing so, we offer an advancement of the dialectic between: (1) classical agency scholars, arguing that equity based pay leads to more risk …