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Full-Text Articles in Business
Financial Literacy Explicated: The Case For A Clearer Definition In An Increasingly Complex Economy, David L. Remund
Financial Literacy Explicated: The Case For A Clearer Definition In An Increasingly Complex Economy, David L. Remund
College of Journalism and Mass Communications: Faculty Publications
This study explicates the concept of financial literacy, which has blossomed in use this century. Scholars, policy officials, financial experts, and consumer advocates have used the phrase loosely to describe the knowledge, skills, confidence, and motivation necessary to effectively manage money. As a result, financial literacy has varying conceptual definitions in existing research as well as diverse operational definitions and values. This study dissects the differing financial literacy definitions and measures, urging researchers toward common ground. A clearer definition should improve future research, in turn helping consumers better understand and adapt to changing life events and an increasingly complex economy.
Executive Compensation And The Maturity Structure Of Corporate Debt, Paul Brockman, Xiumin Martin, Emre Unlu
Executive Compensation And The Maturity Structure Of Corporate Debt, Paul Brockman, Xiumin Martin, Emre Unlu
Department of Finance: Faculty Publications
Executive compensation influences managerial risk preferences through executives’ portfolio sensitivities to changes in stock prices (delta) and stock return volatility (vega). Large deltas discourage managerial risk-taking, while large vegas encourage risk-taking. Theory suggests that short-maturity debt mitigates agency costs of debt by constraining managerial risk preferences. We posit and find evidence of a negative (positive) relation between CEO portfolio deltas (vegas) and short-maturity debt. We also find that shortmaturity debt mitigates the influence of vega- and delta-related incentives on bond yields. Overall, our empirical evidence shows that short-term debt mitigates agency costs of debt arising from compensation risk.