We study how a CFO's risk-taking incentives affect corporate hedging by utilising hand-collected data from 2009 to 2019 on corporate hedging and managerial compensation for a sample of US oil and gas firms. The relative convexity of CFO equity compensation negatively affects the likelihood and extent of hedging. When the CFO and CEO have diverging risk-taking incentives, the relative convexity of the CFO's equity payoff prevails over that of the CEO. This evidence underscores the primary role of the CFO in steering a firm's hedging strategy.
Barbi, M., Febo, V., Massimiliani, I. (2024). CFO pay convexity, risk taking and corporate hedging. EUROPEAN FINANCIAL MANAGEMENT, 30(3), 1545-1586 [10.1111/eufm.12455].
CFO pay convexity, risk taking and corporate hedging
Barbi, Massimiliano;Febo, Valentina
;Massimiliani, Irene
2024
Abstract
We study how a CFO's risk-taking incentives affect corporate hedging by utilising hand-collected data from 2009 to 2019 on corporate hedging and managerial compensation for a sample of US oil and gas firms. The relative convexity of CFO equity compensation negatively affects the likelihood and extent of hedging. When the CFO and CEO have diverging risk-taking incentives, the relative convexity of the CFO's equity payoff prevails over that of the CEO. This evidence underscores the primary role of the CFO in steering a firm's hedging strategy.| File | Dimensione | Formato | |
|---|---|---|---|
|
CFO_pay_convexity.pdf
embargo fino al 24/08/2025
Tipo:
Postprint
Licenza:
Licenza per accesso libero gratuito
Dimensione
752.88 kB
Formato
Adobe PDF
|
752.88 kB | Adobe PDF | Visualizza/Apri Contatta l'autore |
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
