| Author: | Xia, Hui Harry |
| Title: | High return, high risk : does stock option based CEO compensation encourage risk taking & its implications after the adoption of FAS 123R |
| Degree: | D.Mgt. |
| Year: | 2010 |
| Subject: | Hong Kong Polytechnic University -- Dissertations Chief executive officers -- Salaries, etc. |
| Department: | Graduate School of Business |
| Pages: | v, 107 leaves ; 30 cm. |
| Language: | English |
| Abstract: | This study, through empirical evidence of 3,081 firms during the period of 1992-2009, show a strong causal relation between different CEO compensation components and firms' investment policy and firm risk. Specifically, the proportion of CEO option-based compensation is positively and significantly associated with firm's R&D expenditures and firm focus, while the proportion of cash-based and restricted stock compensation are negatively and significantly related. Such results are robust across alternative measures and statistical methodology. Furthermore, I find the non-linear relation between CEO option pay level and R&D investment with practical implications. Finally, following the implementation of FAS 123R in 2005, I provide new evidence that, despite a clear tendency of CEO option pay reduction and replacement with restricted stocks, option-based compensation remains as an effective motivation and even becomes a more efficient incentive for CEO to take risk on R&D investment and firm focus. |
| Rights: | All rights reserved |
| Access: | restricted access |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| b23985987.pdf | For All Users (off-campus access for PolyU Staff & Students only) | 1.01 MB | Adobe PDF | View/Open |
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