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Executive pensions, risk-shifting, and foreign exchange exposure

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  • Krapl, Alain A.
  • White, Reilly S.

Abstract

Using a hand-collected executive compensation database of 272 large U.S. firms from 2000 to 2009, we present the first study of its kind to analyze the effects of executive pension-based compensation on foreign exchange exposure. We find evidence that higher executive pension compensation results in lower foreign exchange exposure among our sample firms, an effect that is strongest when sample firms are closest to bankruptcy. Our results have important implications for the structuring of managerial compensation contracts for multinational firms.

Suggested Citation

  • Krapl, Alain A. & White, Reilly S., 2016. "Executive pensions, risk-shifting, and foreign exchange exposure," Research in International Business and Finance, Elsevier, vol. 38(C), pages 376-392.
    • Handle: RePEc:eee:riibaf:v:38:y:2016:i:c:p:376-392
    DOI: 10.1016/j.ribaf.2016.05.001
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    Cited by:

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    2. Krapl, Alain & Salyer, Robert, 2017. "The effects of fair value reporting on corporate foreign exchange exposures," Research in International Business and Finance, Elsevier, vol. 39(PA), pages 215-238.

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    More about this item

    Keywords

    Foreign exchange exposure; Executive compensation; Pensions; Managerial risk-taking;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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