CEO Risk Taking Equity Incentives and Workplace Misconduct

64 Pages Posted: 16 Jan 2020 Last revised: 31 Jan 2022

See all articles by Justin Chircop

Justin Chircop

Lancaster University Management School

Monika Tarsalewska

University of Exeter Business School

Agnieszka Trzeciakiewicz

School for Business and Society - University of York

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 channels through which CEO vega affects workplace misconduct.

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

School for Business and Society - University of York ( email )

Heslington
York, Yorkshire YO10 5DD
United Kingdom

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