Risk-taking incentives and risk-talking outcomes

Dev Mishra ()

Journal of Banking & Finance, 2024, vol. 160, issue C

Abstract: CEOs’ option-based compensation and discussions about political risk (risk-talking) in successive earnings conference calls are significantly positively associated. This effect is more significant in the subsample of firms with less equity price volatility and poor investment risk-taking (lower capital expenditure). Furthermore, seven out of eight components of risk-talking are positively related to CEOs’ option-based compensation. These findings suggest that CEOs with more options in compensation packages are likely to find discussing political risk during corporate earnings calls as a viable alternative to boost proxies of risk-taking outcomes (such as equity price volatility), especially when they perceive risk-taking expectations to be untenable.

Keywords: CEO compensation; Executive options; Risk-taking incentives; Political risk; Earnings conference calls (search for similar items in EconPapers)
JEL-codes: G3 M1 M4 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:160:y:2024:i:c:s0378426623002753

DOI: 10.1016/j.jbankfin.2023.107080

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