Risk-taking of bank CEOs and corporate innovation

Dien Giau Bui, Yehning Chen, Chih-Yung Lin and Tse-Chun Lin

Journal of International Money and Finance, 2021, vol. 115, issue C

Abstract: We find that banks with CEOs who postpone exercising deep in-the-money options are more likely to lend to firms that are smaller, riskier, and more engaged in corporate innovation. These borrowers also spend more on R&D than a matched sample after getting the loans. Subsequently, these borrowers have higher innovation outputs and achieve greater market valuations. Overall, our findings suggest that the bank CEOs who reveal a high risk-taking attitude by their option exercising behavior help facilitate technological progress via the syndicate loans.

Keywords: CEO risk-taking attitude; Corporate innovation; Bank syndicate loan; R&D; Tobin’s q (search for similar items in EconPapers)
JEL-codes: G21 G31 G32 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:115:y:2021:i:c:s026156062100036x

DOI: 10.1016/j.jimonfin.2021.102387

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