CEO Risk Taking Equity Incentives and Workplace Misconduct
61 Pages Posted: 16 Jan 2020 Last revised: 25 Sep 2020
Date Written: September 25, 2020
We examine the relation between CEO risk taking equity incentives, as captured by CEO vega, and workplace misconduct. Workplace misconduct includes health and safety violations, non-compliance with labor laws, and other violations broadly related to labor exploitation, and results in significant economic costs. Using regression analysis, matched sample tests, and a quasi-natural experiment we find a positive relation between CEO vega and workplace misconduct. We identify a reduction in discretionary expenses and increased pressure on employees to perform as potential channels through which CEO vega affects workplace misconduct. These results suggest that CEO risk taking equity incentives strategically affect operational decision making.
Keywords: Workplace Misconduct, Executive Compensation, Risk taking Equity Incentives
JEL Classification: G30, G32, G34
Suggested Citation: Suggested Citation