Publication Type

Journal Article

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.

Discipline

Corporate Finance | Finance | Finance and Financial Management

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

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

https://doi.org/10.1016/j.jfineco.2014.06.006

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