The inevitable disclosure doctrine and CEO risk-taking incentives

Yang, Jingyu and Zhang, John Z ORCID: 0000-0003-1809-7093
(2023) The inevitable disclosure doctrine and CEO risk-taking incentives. ASIA-PACIFIC JOURNAL OF ACCOUNTING & ECONOMICS, 30 (1). pp. 120-138.

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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.

Item Type: Article
Uncontrolled Keywords: Trade secret law, IDD adoption, CEO risk-taking incentives, equity compensation, external employment opportunities
Depositing User: Symplectic Admin
Date Deposited: 08 Jan 2021 15:53
Last Modified: 18 Jan 2023 23:04
DOI: 10.1080/16081625.2020.1871041
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