CEO Risk Taking Equity Incentives and Workplace Misconduct

2024/08/23 by Justin Chircop, Monika Tarsalewska, Agnieszka Trzeciakiewicz
Economics, Econometrics and Finance · Decision Sciences · Business, Management and Accounting · #Law, Economics, and Judicial Systems #Ethics in Business and Education #Risk Management in Financial Firms

paper · doi:10.2308/tar-2020-0648

Abstract

ABSTRACT We examine the relation between CEO risk taking equity incentives, as captured by CEO vega, and workplace misconduct. Workplace misconduct includes health and safety violations, non-compliance with labor laws, and other violations broadly related to labor exploitation, and it results in significant economic costs. Using regression analysis, matched sample tests, and a quasi-natural experiment, we find a positive relation between CEO vega and workplace misconduct. We identify a reduction in discretionary expenses and increased employee workload as channels through which CEO vega affects workplace misconduct. JEL Classifications: G30; G32; G34.

Citations

• The central role of the propensity score in observational studies for causal effects
• When the Boss Comes to Town: The Effects of Headquarters' Visits on Facility-Level Misconduct
• Do Career Concerns Affect the Delay of Bad News Disclosure?
• Equity Incentives and Earnings Management

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