CEO Risk Taking Equity Incentives and Workplace Misconduct

61 Pages Posted: 16 Jan 2020 Last revised: 25 Sep 2020

See all articles by Justin Chircop

Justin Chircop

Lancaster University Management School

Monika Tarsalewska

University of Exeter Business School

Agnieszka Trzeciakiewicz

Hull University Business School

Date Written: September 25, 2020

Abstract

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

Chircop, Justin and Tarsalewska, Monika and Trzeciakiewicz, Agnieszka, CEO Risk Taking Equity Incentives and Workplace Misconduct (September 25, 2020). Available at SSRN: https://ssrn.com/abstract=3511638 or http://dx.doi.org/10.2139/ssrn.3511638

Justin Chircop (Contact Author)

Lancaster University Management School ( email )

Lancaster University
Lancaster, Lancashire LA1 4YX
United Kingdom

Monika Tarsalewska

University of Exeter Business School ( email )

Streatham Court, Streatham Campus,
Rennes Drive
Exeter, Devon EX4 4PU
United Kingdom

Agnieszka Trzeciakiewicz

Hull University Business School ( email )

Cottingham Road
Hull, Great Britain HU6 7RX
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
223
Abstract Views
1,369
rank
152,036
PlumX Metrics