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
Citation
KIM, Jeong-Bon; LI, Yinghua; and ZHANG, Liandong.
CFOs versus CEOs: Equity incentives and crashes. (2011). Journal of Financial Economics. 101, (3), 713-730.
Available at: https://ink.library.smu.edu.sg/soa_research/1706
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.2011.03.013