Publication Type

Journal Article

Version

acceptedVersion

Publication Date

9-2011

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.

Keywords

Equity incentives, Crash risk, Compensation, Corporate governance, CFO, CEO

Discipline

Accounting | Corporate Finance

Research Areas

Corporate Reporting and Disclosure

Publication

Journal of Financial Economics

Volume

101

Issue

3

First Page

713

Last Page

730

ISSN

0304-405X

Identifier

10.1016/j.jfineco.2011.03.013

Publisher

Elsevier

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.jfineco.2011.03.013

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