The authors conclude that the ownership disclosed in annual filings such as proxy statements overstate pay-for-performance incentives in compensation contracts. This ultimately paints a somewhat misleading story of the true incentives of insider ownership in relation to the firm’s shareholders. The paper “Why Do Insiders Hedge Their Ownership? An Empirical Examination” by Swaminathan Kalpathy of Southern Methodist University’s Cox School of Business, Carr Bettis of Arizona State University, and John Bizjak of Texas Christian University is under circulation.

According to evidence from new research by Finance Professors Swaminathan Kalpathy and Amar Gande, U.S. Federal Reserve emergency financial assistance ("bailouts") is higher among firms whose CEOs have stronger risk-taking incentives. In “CEO Compensation at Financial Firms,” the authors disentangle whether the incentives inherent in CEO compensation contributed to the financial crisis.