Do risk-taking incentives induce CEOs to invest? Evidence from acquisitions

Ettore Croci, Dimitrios Petmezas, Dimitris Petmezas

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review

30 Citazioni (Scopus)

Abstract

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 4.22% enhancement in acquisition investments, consistent with the theory that risk-taking incentives induce CEOs to undertake investments. Importantly, the positive relation between vega and acquisitions is confined only to non-overconfident CEO subgroup. Further, corporate governance does not generally affect the association between vega and acquisition investments. Finally, vega is positively related to bidder announcement returns.
Lingua originaleEnglish
pagine (da-a)1-23
Numero di pagine23
RivistaJournal of Corporate Finance
Volume32
DOI
Stato di pubblicazionePubblicato - 2015

Keywords

  • Executive compensation
  • Managerial incentives
  • Risk-taking
  • acquisition

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