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The influence of compensation interdependence on risk-taking : the role of mutual monitoring

DOI zum Zitieren der Version auf EPub Bayreuth: https://doi.org/10.15495/EPub_UBT_00005830
URN to cite this document: urn:nbn:de:bvb:703-epub-5830-6

Title data

Bolduan, Felix ; Schedlinsky, Ivo ; Sommer, Friedrich:
The influence of compensation interdependence on risk-taking : the role of mutual monitoring.
In: Journal of Business Economics = Zeitschrift für Betriebswirtschaft. Vol. 91 (2021) Issue 8 . - pp. 1125-1148.
ISSN 1861-8928
DOI der Verlagsversion: https://doi.org/10.1007/s11573-021-01030-3

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Project information

Project financing: Dr. Werner Jackstädt-Stiftung

Abstract

This study investigates if and how the influence of compensation interdependence on risk-taking depends on mutual monitoring of risky investment decisions. We argue that individuals under compensation interdependence have a behavioral incentive for higher risk-taking if mutual monitoring is present. Impression management is hypothesized to be the driving force behind this effect, with the visibility of actions to the peers through mutual monitoring as an important prerequisite. The results of a laboratory experiment support our predictions. Additional analyses reveal that impression management drives our results because participants incorporate their peers’ preferences in their decision process. This reasoning is further substantiated as individuals increase their risk-taking if they took less risk than their peers in previous experimental rounds and thus adjust to their respective peer group. Our findings inform firms about the effect of compensation interdependence in working environments with differing opportunities for mutual monitoring.

Further data

Item Type: Article in a journal
Keywords: Risk-taking; Compensation interdependence; Mutual monitoring; Impression Management; Social reasoning
DDC Subjects: 300 Social sciences > 330 Economics
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Business Administration > Chair Business Administration XII with a focus on Controlling > Lehrstuhl Betriebswirtschaftslehre XII with a focus on Controlling - Univ.-Prof. Dr. Friedrich Sommer
Profile Fields > Emerging Fields > Governance and Responsibility
Research Institutions > Research Units > Research Centre for Family Enterprises
Research Institutions > Research Units > Forschungsstelle für Unternehmens- und Kapitalmarktrecht sowie Unternehmenssteuerrecht - Companies, Capital Markets and Taxes - CoCapT
Research Institutions > Affiliated Institutes > Betriebswirtschaftliches Forschungszentrum für Fragen der Mittelständischen Wirtschaft e.V.
Faculties
Faculties > Faculty of Law, Business and Economics
Faculties > Faculty of Law, Business and Economics > Department of Business Administration
Faculties > Faculty of Law, Business and Economics > Department of Business Administration > Chair Business Administration XII with a focus on Controlling
Profile Fields
Profile Fields > Emerging Fields
Research Institutions
Research Institutions > Research Units
Research Institutions > Affiliated Institutes
Language: English
Originates at UBT: Yes
URN: urn:nbn:de:bvb:703-epub-5830-6
Date Deposited: 08 Oct 2021 09:18
Last Modified: 08 Oct 2021 10:11
URI: https://epub.uni-bayreuth.de/id/eprint/5830

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