Geography and CEO Luck: Where Do CEOs Tend to be Lucky?

11 Pages Posted: 11 Jul 2013

See all articles by Pandej Chintrakarn

Pandej Chintrakarn

Mahidol University International College (MUIC)

Napatsorn Jiraporn

State University of New York at New Paltz

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Date Written: July 10, 2013

Abstract

CEOs are “lucky” when they receive stock option grants on days when the stock price is the lowest in the month of the grant, implying opportunistic timing (Bebchuk, Grinstein, and Peyer, 2010). We extend Bebchuk et al. (2010) by investigating the geographic peer effects of CEO luck. Our evidence shows that a CEO is significantly more likely to be lucky when other CEOs in the surrounding area are not lucky. It appears that a CEO tends to practice opportunistic timing of option grants when such a practice is less prevalent and thus less noticeable in the nearby area, probably in order to avoid detection. We estimate that the marginal geographic effect on a given CEO’s luck is 18.36%, which is both statistically and economically significant. Our results suggest that regulators should look for corporate opportunistic behavior where it is not expected.

Keywords: option backdating, CEO luck lucky CEOs, geography, peer effects, opportunistic timing

JEL Classification: G30, G34

Suggested Citation

Chintrakarn, Pandej and Jiraporn, Napatsorn and Jiraporn, Pornsit, Geography and CEO Luck: Where Do CEOs Tend to be Lucky? (July 10, 2013). Available at SSRN: https://ssrn.com/abstract=2292202 or http://dx.doi.org/10.2139/ssrn.2292202

Pandej Chintrakarn

Mahidol University International College (MUIC) ( email )

999 Buddhamonthon 4 Road
Salaya, Nakhonpathom, 73170
Thailand
66 (0) 2441 5090 (Phone)
66 (0) 2441 9745 (Fax)

Napatsorn Jiraporn

State University of New York at New Paltz ( email )

1 Hawk Drive
600 Hawk Drive
New Paltz, NY 12561-2443
United States

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

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