Publication Type
Journal Article
Version
acceptedVersion
Publication Date
11-2014
Abstract
I study the effect of chief executive officer (CEO) optimism on CEO compensation. Usingdata on compensation in US firms, I provide evidence that CEOs whose option exercisebehavior and earnings forecasts are indicative of optimistic beliefs receive smaller stockoption grants, fewer bonus payments, and less total compensation than their peers. Thesefindings add to our understanding of the interplay between managerial biases andremuneration and show how sophisticated principals can take advantage of optimisticagents by appropriately adjusting their compensation contracts.
Keywords
CEO optimism, incentive compensation, compensation contract
Discipline
Corporate Finance | Finance | Finance and Financial Management
Research Areas
Finance
Publication
Journal of Financial Economics
Volume
114
Issue
2
First Page
366
Last Page
404
ISSN
0304-405X
Identifier
10.1016/j.jfineco.2014.06.006
Publisher
Elsevier
Citation
OTTO, Clemens A..
CEO optimism and incentive compensation. (2014). Journal of Financial Economics. 114, (2), 366-404.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5375
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jfineco.2014.06.006