The causal effect of option pay on corporate risk management
This study provides strong evidence of a causal effect of risk-taking incentives provided by option compensation on corporate risk management. We utilize the passage of Financial Accounting Standard (FAS) 123R, which required firms to expense options, to investigate how chief executive officer optio...
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| Veröffentlicht in: | Journal of financial economics 2016-06, Vol.120 (3), p.623-643 |
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| container_end_page | 643 |
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| container_issue | 3 |
| container_start_page | 623 |
| container_title | Journal of financial economics |
| container_volume | 120 |
| creator | Bakke, Tor-Erik Mahmudi, Hamed Fernando, Chitru S. Salas, Jesus M. |
| description | This study provides strong evidence of a causal effect of risk-taking incentives provided by option compensation on corporate risk management. We utilize the passage of Financial Accounting Standard (FAS) 123R, which required firms to expense options, to investigate how chief executive officer option compensation affects the hedging behavior of oil and gas firms. Firms that did not expense options before FAS 123R significantly reduced option pay, which resulted in a large increase in their hedging intensity compared with firms that did not use options or expensed their options voluntarily prior to FAS 123R. |
| doi_str_mv | 10.1016/j.jfineco.2016.02.007 |
| format | Article |
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Firms that did not expense options before FAS 123R significantly reduced option pay, which resulted in a large increase in their hedging intensity compared with firms that did not use options or expensed their options voluntarily prior to FAS 123R.</description><subject>Causality</subject><subject>Chief executive officers</subject><subject>Corporate risk management</subject><subject>Executive compensation</subject><subject>Executive stock options</subject><subject>FAS 123R</subject><subject>Financial accounting standards</subject><subject>Hedging</subject><subject>Managerial compensation</subject><subject>Oil and gas firms</subject><subject>Organizational behavior</subject><subject>Studies</subject><issn>0304-405X</issn><issn>1879-2774</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2016</creationdate><recordtype>article</recordtype><recordid>eNqFkFtLxDAQhYMouF5-ghDwuXWSNk0DgsjiDQRfVvAtZNOJpu42NekK--_NsvvuvBwGzjnDfIRcMSgZsOamL3vnB7Sh5HktgZcA8ojMWCtVwaWsj8kMKqiLGsTHKTlLqYc8UqgZuV18IbVmk8yKonNoJxocDePkw0BHs6VZbIhjiGZCGn36pmszmE9c4zBdkBNnVgkvD3pO3h8fFvPn4vXt6WV-_1rYGthUuE5WAMIpocyyA2lNLUTbVLVaLlVrDLZNZx1vDTaMcQauQccNcwy5FC1n1Tm53veOMfxsME26D5s45JOaSQW1AlVV2SX2LhtDShGdHqNfm7jVDPQOlO71AZTegdLAdaaQc3f7HOYXfj1GnazHwWLnY-ahu-D_afgDswxzNg</recordid><startdate>20160601</startdate><enddate>20160601</enddate><creator>Bakke, Tor-Erik</creator><creator>Mahmudi, Hamed</creator><creator>Fernando, Chitru S.</creator><creator>Salas, Jesus M.</creator><general>Elsevier B.V</general><general>Elsevier Sequoia S.A</general><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>20160601</creationdate><title>The causal effect of option pay on corporate risk management</title><author>Bakke, Tor-Erik ; Mahmudi, Hamed ; Fernando, Chitru S. ; Salas, Jesus M.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c401t-fd73005f959abd07ca45586349bb98aae86dcf28ae611210f6ef2a1f1e2758213</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2016</creationdate><topic>Causality</topic><topic>Chief executive officers</topic><topic>Corporate risk management</topic><topic>Executive compensation</topic><topic>Executive stock options</topic><topic>FAS 123R</topic><topic>Financial accounting standards</topic><topic>Hedging</topic><topic>Managerial compensation</topic><topic>Oil and gas firms</topic><topic>Organizational behavior</topic><topic>Studies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Bakke, Tor-Erik</creatorcontrib><creatorcontrib>Mahmudi, Hamed</creatorcontrib><creatorcontrib>Fernando, Chitru S.</creatorcontrib><creatorcontrib>Salas, Jesus M.</creatorcontrib><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Journal of financial economics</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Bakke, Tor-Erik</au><au>Mahmudi, Hamed</au><au>Fernando, Chitru S.</au><au>Salas, Jesus M.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>The causal effect of option pay on corporate risk management</atitle><jtitle>Journal of financial economics</jtitle><date>2016-06-01</date><risdate>2016</risdate><volume>120</volume><issue>3</issue><spage>623</spage><epage>643</epage><pages>623-643</pages><issn>0304-405X</issn><eissn>1879-2774</eissn><coden>JFECDT</coden><abstract>This study provides strong evidence of a causal effect of risk-taking incentives provided by option compensation on corporate risk management. 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| fulltext | fulltext |
| identifier | ISSN: 0304-405X |
| ispartof | Journal of financial economics, 2016-06, Vol.120 (3), p.623-643 |
| issn | 0304-405X 1879-2774 |
| language | eng |
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| source | ScienceDirect Journals (5 years ago - present) |
| subjects | Causality Chief executive officers Corporate risk management Executive compensation Executive stock options FAS 123R Financial accounting standards Hedging Managerial compensation Oil and gas firms Organizational behavior Studies |
| title | The causal effect of option pay on corporate risk management |
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