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

Croci, Ettore; Petmezas, Dimitris

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


Authors

Ettore Croci



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.

Citation

Croci, E., & Petmezas, D. (2015). Do risk-taking incentives induce CEOs to invest? Evidence from acquisitions. Journal of Corporate Finance, 32, 1-23. https://doi.org/10.1016/j.jcorpfin.2015.03.001

Journal Article Type Article
Acceptance Date Mar 10, 2015
Online Publication Date Mar 17, 2015
Publication Date 2015-06
Deposit Date Jul 29, 2020
Publicly Available Date Jul 29, 2020
Journal Journal of Corporate Finance
Print ISSN 0929-1199
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 32
Pages 1-23
DOI https://doi.org/10.1016/j.jcorpfin.2015.03.001
Public URL https://durham-repository.worktribe.com/output/1265270
Related Public URLs https://epubs.surrey.ac.uk/820550/

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