Does Bonus Deferral Reduce Risk Taking?

28 Pages Posted: 22 Aug 2010 Last revised: 23 Jul 2014

See all articles by Dietmar Leisen

Dietmar Leisen

Johannes Gutenberg University Mainz - Department of Banking

Multiple version iconThere are 2 versions of this paper

Date Written: July 23, 2014

Abstract

We characterize continuous-time risk taking and show that the introduction of deferral increases risk taking at any time when the realized asset value is large or small. For realized asset values in-between we derive the parameterizations of deferral for which risk taking decreases and discuss trade-offs in setting the deferral parameters.

Keywords: bonus, risk, risk aversion, deferral ratio

JEL Classification: G28, G38

Suggested Citation

Leisen, Dietmar P. J., Does Bonus Deferral Reduce Risk Taking? (July 23, 2014). Available at SSRN: https://ssrn.com/abstract=1662555 or http://dx.doi.org/10.2139/ssrn.1662555

Dietmar P. J. Leisen (Contact Author)

Johannes Gutenberg University Mainz - Department of Banking ( email )

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