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CEO risk taking equity incentives and workplace misconduct

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<mark>Journal publication date</mark>1/01/2025
<mark>Journal</mark>The Accounting Review
Issue number1
Volume100
Number of pages29
Pages (from-to)139-167
Publication StatusPublished
<mark>Original language</mark>English

Abstract

We examine the relation between CEO risk taking equity incentives, as captured by CEO vega, and workplace misconduct. Workplace misconduct includes health and safety violations, non-compliance with labor laws, and other violations broadly related to labor exploitation, and it results in significant economic costs. Using regression analysis, matched sample tests, and a quasi-natural experiment, we find a positive relation between CEO vega and workplace misconduct. We identify a reduction in discretionary expenses and increased employee workload as channels through which CEO vega affects workplace misconduct.