The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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Search results: 2.
Worker Runs
Published: 01/30/2025 | DOI: 10.1111/jofi.13424
FLORIAN HOFFMANN, VLADIMIR VLADIMIROV
The voluntary departure of hard‐to‐replace skilled workers worsens firm prospects, which can lead to additional departures. We develop a model in which firms design compensation to limit the risk of such “worker runs.” To achieve cost‐efficient retention, firms combine fixed wages with dilutable compensation—such as vesting equity or bonus pools—which pays remaining workers more when others leave but gets diluted otherwise. Compensating (identical) workers with differently structured compensation, that is, with a different mix of output‐dependent and output‐independent pay, can further mitigate the risk of worker runs by ensuring a critical retention level in a cost‐efficient way.
The Economics of Deferral and Clawback Requirements
Published: 05/28/2022 | DOI: 10.1111/jofi.13160
FLORIAN HOFFMANN, ROMAN INDERST, MARCUS OPP
We analyze the effects of regulatory interference in compensation contracts, focusing on recent mandatory deferral and clawback requirements restricting incentive compensation of material risk‐takers in the financial sector. Moderate deferral requirements have a robustly positive effect on risk‐management effort only if the bank manager's outside option is sufficiently high; otherwise, their effectiveness depends on the dynamics of information arrival. Stringent deferral requirements unambiguously backfire. Our normative analysis characterizes whether and how deferral and clawback requirements should supplement capital regulation as part of the optimal policy mix.