Do Risk-Taking Incentives Induce CEOs to Invest? New Evidence from Acquisitions

Ettore Croci, Dimitris Petmezas

Research output: Chapter in Book/Report/Conference proceedingConference contribution


This paper examines the effect of risk-taking incentives on acquisition investments. We find that CEOs with risk-taking incentives are more likely to invest in acquisitions. Economically, an inter-quartile range increase in vega translates into an approximately 4.8% enhancement in acquisition investments, consistent with the theory that risk-taking incentives induce CEOs to undertake investments. Corporate governance does not affect the association between vega and acquisition investments. The positive relationship between vega and acquisitions is confined only to non-overconfident CEOs subgroup and vested options. Risk-taking incentives do not promote internal investments. Finally, vega is positively related to bidder announcement returns.
Original languageEnglish
Title of host publicationFMA Europe 2013
Publication statusPublished - 2013
EventFMA Europe 2013 - Lussemburgo
Duration: 13 Jun 201314 Feb 2014


ConferenceFMA Europe 2013


  • Risk-taking incentives
  • acquisition


Dive into the research topics of 'Do Risk-Taking Incentives Induce CEOs to Invest? New Evidence from Acquisitions'. Together they form a unique fingerprint.

Cite this