Abstract
AbstractExecutive stock options are provided to risk‐averse CEOs to encourage risk‐taking. We show that the efficacy of such stock options is moderated by CEOs’ regulatory focus—their intrinsic motivations to avoid losses or achieve gains. We show that stock options have a negligible impact on the risk‐taking behavior of CEOs who are intrinsically motivated to avoid losses or take on risks. The impact of stock options on firm risk is strongest among CEOs whose regulatory focus is moderate and whose behavior is thus more malleable. Our paper shows that CEO intrinsic risk‐taking motivations have important implications for the effectiveness of extrinsic risk‐taking incentives provided by stock options.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
