Workshop in Recent Evidence on CEO Incentives (expired)

FIN537 Workshop in Recent Evidence on CEO Incentives (expired)

Autumn 2021

  • Topics

    This course will explore recent empirical work on CEO incentives and outcomes from the perspective of effective experimental designs and relevant CEO, board, firm and industry characteristics. The course will review and explore the evidence on CEO risk-aversion, over-confidence, compensation incentives, incentives associated with firm financial claim ownership, firm-specific human capital, reputation incentives, perquisites and private benefits of control, the probability of forced turnover and other labor market opportunities. The course will presume that students have carefully read the assigned material prior to class and are prepared to critically discuss the recent empirical evidence. The course will discuss useful databases in this literature, data concerns, and various approaches to addressing endogeneity issues.

  • Learning outcome

    Knowledge - The candidate...

    • is knowledgeable of the major financial economic topics surrounding CEO incentives, including theoretical motivations and existing empirical evidence.
    • can evaluate and critique various methods and approaches to conducting empirical research in this area

    Skills - The candidate...

    • can formulate hypotheses, plan and carry out empirical research within the domain of CEO incentives
    • can contribute to the development of new knowledge, theories and methods of measuring and assessing CEO incentives
    • can carry out research and scholarly research work at a high international standard and be able to publish in international peer reviewed finance journals

    Competence - The candidate...

    • can identify the contribution of their research and carry out his/her research effectively and with scholarly integrity
    • can communicate research on CEO incentives and actively participate in debates about the field in national and international scholarly forums

  • Teaching

    The workshop will consist of 3 days with 3 hours of lectures and discussion, where participation in discussions are important components for all participants.

  • Requirements for course approval

    Each enrolled student should plan to present one critique of an assigned article in class. Please exclude any articles that I have co-authored and check with me in advance ( of the course as to whether you preferred article is still available for presentation. Your presentation is strictly limited to 30 minutes and it should be a critical summary of the paper including possible extensions and related papers that are omitted by the authors.

    Students should be prepared to critically discuss any of the 3 or 4 assigned research articles for each class when randomly called upon.

  • Assessment

    Student's active participation in class, as well as a term paper that presents a detailed research proposal in this area. 

    Pass/fail based on class participation (50%) and term paper (50%).

  • Grading Scale


  • Computer tools

    It is assumed that all interested students have a working knowledge of MatLab, Stata, etc.

  • Literature

    Assigned and Recommended Readings:

    All background readings and the assigned readings for class 1 should be completed before the course begins.  Assigned readings are designated by an *.

    Background Reading for Corporate Governance Seminar (Prof. Ron Masulis)

    *Atanasov, V. and B. Black, 2016, Shock-Based Causal Inference in Corporate Finance and

    Accounting Research, Critical Finance Review, 5: 207-304.

    Background Readings: Survey Articles on CEO Incentives

    *Edmans, A., X. Gabaix and D. Jenter, 2017, Executive Compensation: A Survey of Theory and Evidence, ECGI working paper.

    *Hermalin, H. and M. Weisbach, Assessing Managerial Ability: Implications for Corporate Governance, Chapter 3 of The Handbook of the Economics of Corporate Governance, coedited by B. Hermalin and M. Weisbach, 2017, Elsevier Publishers.

    Murphy, K., 2013, Executive Compensation: Where We Are and How We Got There, Handbook of the Economics of Finance (PA), 211-356.

    CEO Incentives (class 1)

    *Wei, C. and D. Yermack, 2011, Investor Reactions to CEOs¿ Inside Debt Incentives, Review of Financial Studies 24, 3813-3840.

    *Anderson, J. and J. Core, 2018, Managerial Incentives to Increase Risk Provided by Debt, Stock, and Options, Management Science, forthcoming.

    *Bernile, G., V. Bhagwat and R. Rau, 2017, What doesn't kill you will only make you more risk-loving: early-life disasters and CEO behaviour, Journal of Finance 72(1), 167-206

    Manager Incentives and Firm Decision Making (classes 2 and 3)

    *Banerjee, S., R. Masulis and A. Upadhyay, July 2018, Mitigating Effects of Gender Diverse Board in Companies with Aggressive Management, UNSW working paper.

    *Bizjak, J., S. Kalpathy, and V. Mihov, January 2018, Performance Contingencies in CEO Equity Awards and Debt Contracting, Texas Christian University working paper.

    *Dou, Y., R. Masulis and J. Zein, May 2018, Shareholder Wealth Consequence of Insider Pledging of Company Stock as Collateral for Personal Loans.

    *Islam, E. and J. Zein, February 2018, Investor CEOs and Corporate Innovation, UNSW working paper.

    *Khanna, E. H. Kim and Y. Lu, 2015, CEO Connectedness and Corporate Fraud, Journal of Finance 70(3), 1203-1252.

    *Liu, C. Y., R. Masulis and J. Stanfield, May 2018, CEO Option Compensation Can Be a Bad Option: Evidence from Product Market Relationships, UNSW working paper.

    *Lu, Jun, and Wei Wang, 2017, Managerial Conservatism, Board Independence, and Corporate Innovation, Working Paper.

    *Masulis, R., C. Wang, and F. Xie, May 2018, Worker-Manager Alliance and Shareholder Returns from Acquisitions, UNSW working paper.

    Other Recommended Readings:

    Armstrong, C., D. Larcker, G. Ormazabal, and D. Taylor, 2013, The relation between equity incentives and misreporting: The role of risk-taking incentives. Journal of Financial Economics109(2), 327-350.

    Bizjak, J., S. Kalpathy, and V. Mihov, January 2018, Performance Contingencies in CEO Equity Awards and Debt Contracting, working paper, Texas Christian University.

    Chu, J., J. Faasse and R. Rau, 2018, Do compensation consultants enable higher CEO pay? A disclosure rule change as a separating device, Management Science forthcoming

    Dasgupta, S., A. Wang and X. Li, 2017, Product Market Competition Shocks, Firm Performance, and Forced CEO Turnover, Review of Financial Studies forthcoming.

    Davidson, R., A. Dey, A., Smith, 2015, Executives¿ "Off-the-Job" Behavior, Corporate Culture, and Financial Reporting Risk, Journal of Financial Economics 117(1), 5-28.

    Edmans, A., P. Chaigneau and D. Gottlieb, 2018, Does Improved Information Improve Incentives? Journal of Financial Economics, forthcoming.

    Edmans, A., V. Fang and A. Hung, 2017, The long-term consequences of short-term incentives, ECGI Working Paper.

    Edmans, A., L. Goncalves-Pinto, M. Groen-Xu, and Y. Wang, 2018, Strategic News Releases in Equity Vesting Months, Review of Financial Studies forthcoming.

    Focke, F., E. Maug, and A. Niessen-Ruenzi, 2017, The Impact of Firm Prestige on Executive Compensation, Journal of Financial Economics, 123(2): 313-336.

    Gormley, T. and D. Matsa, 2016, Playing It Safe? Managerial Preferences, Risk, and Agency Conflicts, Journal of Financial Economics 122 (3), 431-455.

    Graham, J., C. Harvey and M. Puri, 2016, A Corporate Beauty Contest, Management Science 63:9, 3044-3056.

    Lie, E. and K. Yang, January 2018, Import Penetration and Executive Compensation, University of Iowa working paper.

    Ma, P., J. Shin, and C. Wang, September 2017, Relative Performance Benchmarks: Do Boards Follow the Informativeness Principle?, Harvard Business School Working paper.


ECTS Credits
Teaching language


Course responsible

Professor Ron Masulis, UNSW Business School