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CEO compensation and banks’ risk-taking during pre and post financial crisis periods

Shah, Syed Zulfiqar Ali; Akbar, Saeed; Liu, Jia; Liu, Ziyu; Cao, Sichen


Syed Zulfiqar Ali Shah

Saeed Akbar

Jia Liu

Ziyu Liu

Sichen Cao


© 2017 Elsevier B.V. This study examines the impact of CEO compensation on banks’ risk during both pre and post-financial crisis periods. Our results suggest a negative relationship between CEO bonuses and banks’ risk in the pre-financial crisis period. Similarly, restricted shares and options granted to CEOs in the post-financial crisis period also appear to decrease banks’ risk. In contrast, we observe a positive influence of the Troubled Asset Relief Program (TARP) on banks’ risk. Our results also show that the length of time to maturity of options influences banks’ risk-taking behavior. Our findings have useful implications for formulating and regulating CEO compensation structure.


Shah, S. Z. A., Akbar, S., Liu, J., Liu, Z., & Cao, S. (2017). CEO compensation and banks’ risk-taking during pre and post financial crisis periods. Research in international business and finance, 42, 1489-1503.

Journal Article Type Article
Acceptance Date Jul 3, 2017
Online Publication Date Jul 8, 2017
Publication Date 2017-12
Deposit Date Sep 18, 2018
Publicly Available Date Oct 27, 2022
Journal Research in International Business and Finance
Print ISSN 0275-5319
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 42
Pages 1489-1503
Keywords Compensation; Risk-taking; Financial crisis; TARP
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