ABSTRACT

This study investigates the impact of the inevitable disclosure doctrine (IDD) on risk-taking incentives of chief executive officers (CEOs). Because the IDD restricts CEOs’ external employment opportunities, we expect CEOs to become more risk-averse and firms to increase CEO risk-taking incentives after IDD adoption. Consistent with expectations, we find that IDD adoption is associated with higher CEO risk-taking incentives, measured by the sensitivity of CEOs’ equity holdings to stock return volatility (Vega). The positive impact of IDD adoption on CEO risk-taking incentives is stronger for firms in more homogeneous industries and for CEOs in the later years of their tenure.

摘要

本研究调查了不可避免披露原则 (IDD) 对首席执行官 (CEO) 冒险激励的影响。由于 IDD 限制了 CEO 的外部就业机会，我们预计 CEO 在采用 IDD 后会变得更加厌恶风险，并且公司会增加 CEO 冒险的激励。与预期一致，我们发现采用 IDD 与更高的 CEO 冒险激励相关，这是通过 CEO 持股对股票回报波动率 (Vega) 的敏感性来衡量的。IDD 采用对 CEO 冒险激励的积极影响对于更同质行业的公司和任期后期的 CEO 来说更强。