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Article
1 Behavioral Agency and Affect.docx
Journal of Management (2019)
  • Geoffrey P Martin, Dr
  • Leon Zolotoy, Melbourne Business School
  • Don O'Sullivan, Melbourne Business School
Abstract
We advance behavioral agency theory by exploring the influence of mood or “affect” on the behavioral consequences of equity incentives. Drawing on insights from psychology and behavioral decision theory, we describe how affect influences agent risk behavior. We argue that positive affect amplifies both the extent to which executives reduce strategic risk taking in response to risk bearing and engage in strategic risk taking in response to incentives for further enrichment. Building again on the psychology literature, we describe how CEO accountability attenuates the influence of affect on CEO risk behavior in response to equity incentives. We test our expectations in a longitudinal dataset of CEO equity incentives and strategic risk taking by U.S. firms for the period 1994—2013.
Keywords
  • CEO risk taking,
  • Affect,
  • risk bearing
Disciplines
Publication Date
Winter February 10, 2019
DOI
Forthcoming
Citation Information
Geoffrey P Martin, Leon Zolotoy and Don O'Sullivan. "1 Behavioral Agency and Affect.docx" Journal of Management (2019)
Available at: http://works.bepress.com/geoffrey_martin/15/