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Article
AMP Bridging Finance and Behavioral Scholarship on Agent Risk Sharing and Risk Taking
Academy of Management Perspectives (2016)
  • Luis R Gomez-Mejia, Prof, University of Notre Dame
  • Robert M Wiseman, Michigan State University
Abstract
A large volume of research has examined agent risk taking and the contracting problem of risk sharing – the sharing of performance risk across agent and principal – to advance our knowledge of mechanisms that can align the assumed divergent interests and risk preferences of the managerial-agent and shareholder-principal. This research has been undertaken in two research streams that appear to have operated in silos, utilizing different theoretical frameworks and methodological approaches: financial economics and behavioral science. We review the theoretical paradigms and empirical findings deriving from both fields in order to identify opportunities for cross-fertilization and to advance future research in both streams. We also make an assessment of how the combined research efforts of finance and behavioral scholars has progressed in developing our understanding of agent risk taking and mechanisms for achieving agent-principal incentive alignment. Finally, we discuss how this research has influenced the corporate world for better or for worse.
Keywords
  • Agency,
  • Risk,
  • Finance,
  • Risk bearing
Disciplines
Publication Date
Winter December 1, 2016
Citation Information
Luis R Gomez-Mejia and Robert M Wiseman. "AMP Bridging Finance and Behavioral Scholarship on Agent Risk Sharing and Risk Taking" Academy of Management Perspectives (2016)
Available at: http://works.bepress.com/geoffrey_martin/8/