Stock Option Grants and Managerial Risk Taking: Evidence from Japanese Intraday Stock Return Data

2011 ◽  
Author(s):  
Hiroshi Moriyasu ◽  
Konari Uchida
Keyword(s):  
Risk Taking ◽  
Stock Return ◽  
Stock Option ◽  
Managerial Risk ◽  
Return Data

Does Greater Risk-Bearing in Stock Option Compensation Reduce the Influence of Problem Framing On Managerial Risk-Taking Behavior?

2011 ◽  
Vol 23 (1) ◽  
pp. 185-201 ◽  
Author(s):  
Kimberly Sawers ◽  
Arnold Wright ◽  
Valentina Zamora
Keyword(s):  
Risk Taking ◽  
Stock Options ◽  
Stock Option ◽  
Money Stock ◽  
Agency Model ◽  
Problem Framing ◽  
Managerial Risk ◽  
Option Compensation ◽  
Behavioral Agency ◽  
Stock Option Compensation

ABSTRACT: We examine the extent to which the behavioral agency model reflects the relation between greater risk-bearing in stock option compensation and managerial risk-taking. The behavioral agency model predicts that managers with greater wealth at stake will avoid risky projects that threaten their wealth. This greater risk-bearing effect moderates the problem-framing effect, which predicts that loss-averse managers will be more (less) risk-taking when choosing among loss (gain) projects. Using a 2 × 2 between-subjects experiment with 108 M.B.A. students acting as managers, we find that managers are more risk-taking in the loss context than in the gain context when they have at-the-money stock options but not when they have wealth at stake through in-the-money stock options. Further, we find that managers with in-the-money stock options are less risk-taking than managers with at-the-money stock options in the loss context. These findings support the behavioral agency model prediction that greater risk-bearing in stock option compensation (moving from at-the-money stock options to in-the-money stock options) reduces the problem framing effect on risk-taking behavior, particularly when the firm faces a loss decision context. Our results point to the importance of considering the implications of risk-bearing in stock option compensation for managers choosing risky projects that affect firm value.

Stock option pay versus restricted stock: A comparative analysis of their impact on managerial risk-taking and performance extremeness

2018 ◽  
Vol 18 (2) ◽  
pp. 301-329 ◽  
Author(s):  
Wanrong Hou ◽  
Steve Lovett ◽  
Abdul Rasheed
Keyword(s):  
Comparative Analysis ◽  
Risk Taking ◽  
Stock Options ◽  
Stock Option ◽  
Large Sample ◽  
Managerial Risk ◽  
Ceo Tenure ◽  
Restricted Stock ◽  
And Performance ◽  
Using Data

This study investigates how two stock-based incentives affect the risk-taking behavior of CEOs. We compare stock options and restricted stock in terms of their impact on the magnitude of investments and performance extremeness. We test our hypotheses using data for 23 years starting from 1993 for a large sample of S&P 1500 firms. Our results indicate that both stock option and restricted stock pay increase the magnitude of investments undertaken by CEOs, but that stock options have a much stronger effect. Also, stock option pay increases the likelihood of both big gains and big losses, but restricted stock reduces the likelihood of big losses. Finally, we find that as CEO tenure increases, the effects of stock-based compensation tend to diminish. Therefore, stock-based incentives appear to be a useful solution to the agency problem for short-tenured CEOs, but much less so for long-tenured CEOs.

scholarly journals Managerial Risk-Taking Incentive and Firm Innovation: Evidence from FAS 123R

2018 ◽  
Vol 53 (2) ◽  
pp. 867-898 ◽  
Author(s):  
Connie X. Mao ◽  
Chi Zhang
Keyword(s):  
Risk Taking ◽  
Chief Executive Officers ◽  
Causal Effect ◽  
Chief Executive ◽  
Stock Option ◽  
Firm Innovation ◽  
Accounting Regulation ◽  
Innovation Activities ◽  
Managerial Risk ◽  
Executive Officers

We investigate how chief executive officers’ (CEOs) risk incentive (VEGA) affects firm innovation. To establish causality, we exploit compensation changes instigated by the FAS 123R accounting regulation in 2005 that mandated stock option expensing at fair values. Our identification tests indicate a positive and causal effect of CEOs’ VEGA on innovation activities. Furthermore, dampened managerial risk-taking incentive after the implementation of FAS 123R leads to a significant reduction in innovation related to firms’ core business and explorative inventions. It implies that managers diversify their innovation portfolios and decrease explorative inventions to curtail business risk when their risk-taking incentive is reduced.

scholarly journals Employment risk, compensation incentives, and managerial risk taking: Evidence from the mutual fund industry

2009 ◽  
Vol 92 (1) ◽  
pp. 92-108 ◽  
Author(s):  
Alexander Kempf ◽  
Stefan Ruenzi ◽  
Tanja Thiele
Keyword(s):  
Risk Taking ◽  
Mutual Fund ◽  
Risk Compensation ◽  
Managerial Risk ◽  
Fund Industry ◽  
Mutual Fund Industry ◽  
Compensation Incentives ◽  
Employment Risk

Managerial risk-taking incentives, product market competition and welfare

2004 ◽  
Vol 48 (2) ◽  
pp. 391-401 ◽  
Author(s):  
Sudipto Dasgupta ◽  
Jhinyoung Shin
Keyword(s):  
Risk Taking ◽  
Market Competition ◽  
Product Market ◽  
Product Market Competition ◽  
Managerial Risk

Corporate Social Responsibility, Corporate Governance, and Managerial Risk-Taking

2015 ◽  
Author(s):  
Mohamed Ayadi ◽  
Martin I. Kusy ◽  
Minyoung Pyo ◽  
Samir Trabelsi
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Risk Taking ◽  
Managerial Risk ◽  
Corporate Social
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