CEO risk preferences and hedging decisions: A multiyear analysis

John A. Doukas and Sonik Mandal

Journal of International Money and Finance, 2018, vol. 86, issue C, 131-153

Abstract: Theory and previous empirical studies suggest that CEO risk preferences affect hedging. We challenge this idea in a 5-year time series setting by using inside debt (i.e., CEO pension and deferred compensation) and the CEO Vega and CEO Delta, as proxies of CEO risk preferences, and document that neither risk-averse (i.e., debt like compensation) nor risk-seeking (i.e., convex compensation) inducing CEO compensation packages influence corporate hedging. Moreover, we find CEOs who have more previous work experience and high job tenure to be positively related to hedging.

Keywords: Hedging; CEO risk preferences; CEO personal characteristics (search for similar items in EconPapers)
JEL-codes: G02 G10 G3 G30 G32 G39 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:86:y:2018:i:c:p:131-153

DOI: 10.1016/j.jimonfin.2018.04.007

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