Download This PaperCFOs versus CEOs: Equity Incentives and Crashes
52 Pages Posted: 30 Dec 2010 Last revised: 27 Sep 2011
Date Written: March 10, 2011
Abstract
Using a large sample of U.S. firms for the period 1993-2009, we provide evidence that the sensitivity of a chief financial officer’s (CFO) option portfolio value to stock price is significantly and positively related to the firm’s future stock price crash risk. In contrast, we find only weak evidence of the positive impact of chief executive officer option sensitivity on crash risk. Finally, we find that the link between CFO option sensitivity and crash risk is more pronounced for firms in non-competitive industries and those with a high level of financial leverage.
Keywords: Equity incentives, Crash risk, Compensation, Corporate governance, CFO, CEO
JEL Classification: D89, G12, G14, G17, G34, M52
Suggested Citation: Suggested Citation
Liandong Zhang (Contact Author)
Singapore Management University - School of Accountancy ( email )
60 Stamford Road
Singapore 178900
Singapore
HOME PAGE: http://accountancy.smu.edu.sg/faculty/profile/150531/Liandong-ZHANG
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Are CEOS Really Paid Like Bureaucrats?
By Brian J. Hall and Jeffrey B. Liebman
-
Are CEOS Really Paid Like Bureaucrats?
By Brian J. Hall and Jeffrey B. Liebman
-
The Other Side of the Tradeoff: The Impact of Risk on Executive Compensation
-
Good Timing: CEO Stock Option Awards and Company News Announcements
-
Good Timing: CEO Stock Option Awards and Company News Announcements
-
The Use of Equity Grants to Manage Optimal Equity Incentive Levels
By John E. Core and Wayne R. Guay
-
The Other Side of the Tradeoff: the Impact of Risk on Executive Compensation
-
Stock Options for Undiversified Executives
By Brian J. Hall and Kevin J. Murphy