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Managerial Career Concerns and Risk Management

Author

Listed:
  • Nam, Jouahn

    (Pace University)

  • Wang, Jun

    (Baruch College)

  • Zhang, Ge

    (University of New Orleans)

Abstract

We present a dynamic model of corporate risk management and managerial career concerns. We show that managers with high (low) career concerns are more likely to speculate (hedge) early in their careers. In the later stage of their careers when managers have less career concerns, there is no speculative motive for self interested managers. On the other hand, managers with minimal career concerns engage in neither hedging nor speculation early in their careers, but they may choose to hedge after poor early performance.

Suggested Citation

  • Nam, Jouahn & Wang, Jun & Zhang, Ge, 2005. "Managerial Career Concerns and Risk Management," Working Papers 2005-10, University of New Orleans, Department of Economics and Finance.
    • Handle: RePEc:uno:wpaper:2005-10
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    More about this item

    Keywords

    Risk management; Dynamic model; Hedging; Speculation;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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