The paper is entitled: ‘The impact of clawback provisions on information processing and investment behaviour’. The authors examine whether so-called “clawback” provisions in managerial incentive schemes are suitable tools to counter managerial risk-taking. Clawback compensation schemes allow companies to reclaim previously paid compensation. The authors find that indeed managers under a clawback regime are less likely to invest in high risk projects, but only when the company is in a good financial position. In a recession-like environment, where the outcome of an investment decision affects only the potential size of a company’s loss, clawback provisions lead to additional risk-taking. The authors argue that clawbacks are ipso facto no panacea in restraining managerial risk taking.
You may access the article here (http://www.sciencedirect.com/science/article/pii/S1044500516301147).