CEO Risk Taking Equity Incentives and Workplace Misconduct

This paper examines the relation between CEO risk taking stock option incentives, as captured by CEO vega, and workplace misconduct. Workplace misconduct includes health and safety violations, non-compliance with labour laws, and other violations broadly related to labour exploitation. Using regression analysis, matched sample tests, and a quasi-natural experiment we show a positive relation between CEO vega and workplace misconduct. These results suggest that CEO risk taking stock option incentives not only influence investment and financial decision making, but also affect operational decision making.