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CEO option incentives, firm risk-taking and shareholder value: evidence from Australia

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Show simple item record Bian, Chao 2017-03-19T21:41:28Z 2017-03-19T21:41:28Z 2016-05-12
dc.description.abstract This study aims at examining the effects of Chief Executive Officers’ (CEOs) option incentives on corporate risk-taking and share market performance based on a panel data set drawn from the 137 largest (by market capitalisation) Australian public firms, for the period 2003 to 2012. The current study also investigates the moderating effects of CEO characteristics on the relationship between corporate environmental responsibility (CER) engagement and corporate financial performance (CFP). The results show that pay-risk sensitivity (vega) has a positive effect on corporate risky financial policy measured by book leverage; while CEO pay-share price sensitivity (delta) has a negative effect on CEOs’ risk-taking behaviour. Further, the study results suggest that out-of or at-the-money options, coupled with longer remaining time to expiration, have substantially positive impact on CEOs’ incentive to take more risks. The results reveal an inverted-U relationship between CEO delta and firm market-based performance measured by Tobin’s Q. In addition, using provisions for site rehabilitation as a new proxy for CER engagement, the results show that short-tenured and high-cash paid CEOs are more likely to use CER engagement as a compensation management tool. The results also document positive association between CER and CFP only in an industry’s cooling-off period. en
dc.language.iso en en
dc.publisher Lincoln University en
dc.subject option incentives en
dc.subject risk taking en
dc.subject book leverage en
dc.subject CEO en
dc.subject Tobin’s Q en
dc.subject corporate social responsibility en
dc.subject corporate financial performance en
dc.subject risk assessment en
dc.subject corporate governance en
dc.subject minerals en
dc.subject metals en
dc.title CEO option incentives, firm risk-taking and shareholder value: evidence from Australia en
dc.type Thesis en Lincoln University en Doctoral en Doctor of Philosophy en
lu.thesis.supervisor Gan, Christopher
lu.thesis.supervisor Li, Zhaohua
lu.thesis.supervisor Hu, Baiding
lu.contributor.unit Department of Financial and Business Systems en
dc.subject.anzsrc 14 Economics en
dc.subject.anzsrc 15 Commerce, Management, Tourism and Services en
dc.subject.anzsrc 150303 Corporate Governance and Stakeholder Engagement en

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