Swinging for the fences: The effects of CEO stock options on company risk taking and performance

• 成果类型: Article
• 署名作者: Sanders, W. M. Gerard; Hambrick, Donald C.
• 署名单位: Brigham Young University; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park; Columbia University
• 刊物名称: ACADEMY OF MANAGEMENT JOURNAL
• ISSN/ISSBN: 0001-4273
• 发表日期: 2007
• 页码: 1055-1078
• 关键词: research-and-development; managerial incentives; executive-compensation; EQUITY OWNERSHIP; firm; AGENCY; management; pay; governance; MARKET

摘要

We unpack the concept of managerial risk taking, distinguishing among three of its major elements: the size of an outlay, the variance of potential outcomes, and the likelihood of extreme loss. We then apply our framework in hypothesizing the effects of CEO stock options on strategic behavior and company performance. We find that CEO stock options engender high levels of investment outlays and bring about extreme corporate performance (big gains and big losses), suggesting that stock options prompt CEOs to make high-variance bets, not simply larger bets. Finally, we find that option-loaded CEOs deliver more big losses than big gains.