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.
Original language | English (US) |
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Pages (from-to) | 713-730 |
Number of pages | 18 |
Journal | Journal of Financial Economics |
Volume | 101 |
Issue number | 3 |
DOIs | |
State | Published - Sep 2011 |
Externally published | Yes |
Keywords
- CFO
- Compensation
- Corporate governance
- Crash risk
- Equity incentives
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics
- Strategy and Management