This paper examines the effect of risk-taking incentives on acquisition investments. We find that CEOs with risk-taking incentives are more likely to invest in acquisitions. Economically, an inter-quartile range increase in vega translates into an approximately 4.22% enhancement in acquisition investments, consistent with the theory that risk-taking incentives induce CEOs to undertake investments. Importantly, the positive relation between vega and acquisitions is confined only to non-overconfident CEO subgroup. Further, corporate governance does not generally affect the association between vega and acquisition investments. Finally, vega is positively related to bidder announcement returns.

Croci, E., Petmezas, D., Do risk-taking incentives induce CEOs to invest? Evidence from acquisitions, <<JOURNAL OF CORPORATE FINANCE>>, 2015; 32 (N/A): 1-23. [doi:10.1016/j.jcorpfin.2015.03.001] [http://hdl.handle.net/10807/65939]

Do risk-taking incentives induce CEOs to invest? Evidence from acquisitions

Croci, Ettore;Petmezas, Dimitrios
2015

Abstract

This paper examines the effect of risk-taking incentives on acquisition investments. We find that CEOs with risk-taking incentives are more likely to invest in acquisitions. Economically, an inter-quartile range increase in vega translates into an approximately 4.22% enhancement in acquisition investments, consistent with the theory that risk-taking incentives induce CEOs to undertake investments. Importantly, the positive relation between vega and acquisitions is confined only to non-overconfident CEO subgroup. Further, corporate governance does not generally affect the association between vega and acquisition investments. Finally, vega is positively related to bidder announcement returns.
Inglese
Croci, E., Petmezas, D., Do risk-taking incentives induce CEOs to invest? Evidence from acquisitions, <<JOURNAL OF CORPORATE FINANCE>>, 2015; 32 (N/A): 1-23. [doi:10.1016/j.jcorpfin.2015.03.001] [http://hdl.handle.net/10807/65939]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10807/65939
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