Geography and CEO luck: where do CEOs tend to be lucky?

Pandej Chintrakarn, Napatsorn Jiraporn, Pornsit Jiraporn

Research output: Contribution to journalArticle

Abstract

CEOs are 'lucky' when they receive stock option grants on days when the stock price is the lowest in the month of the grant, implying opportunistic timing (Bebchuk et al., 2010). We extend Bebchuk et al. (2010) by investigating the geographic peer effects of CEO luck. Our evidence shows that a CEO is significantly more likely to be lucky when other CEOs in the surrounding area are not lucky. It appears that a CEO tends to practice opportunistic timing of option grants when such a practice is less prevalent and thus less noticeable in the nearby area, probably in order to avoid detection. We estimate that the marginal geographic effect on a given CEO's luck is 18.36%, which is both statistically and economically significant. Our results suggest that regulators should look for corporate opportunistic behaviour where it is not expected.

Original languageEnglish (US)
Pages (from-to)125-128
Number of pages4
JournalApplied Economics Letters
Volume21
Issue number2
DOIs
StatePublished - Jan 1 2014

Fingerprint

Geography
Luck
Chief executive officer
Peer effects
Opportunistic behavior
Stock prices
Stock option grants

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Cite this

Chintrakarn, Pandej ; Jiraporn, Napatsorn ; Jiraporn, Pornsit. / Geography and CEO luck : where do CEOs tend to be lucky?. In: Applied Economics Letters. 2014 ; Vol. 21, No. 2. pp. 125-128.
@article{8bed9adfd23b4b82814c57a23912eb5b,
title = "Geography and CEO luck: where do CEOs tend to be lucky?",
abstract = "CEOs are 'lucky' when they receive stock option grants on days when the stock price is the lowest in the month of the grant, implying opportunistic timing (Bebchuk et al., 2010). We extend Bebchuk et al. (2010) by investigating the geographic peer effects of CEO luck. Our evidence shows that a CEO is significantly more likely to be lucky when other CEOs in the surrounding area are not lucky. It appears that a CEO tends to practice opportunistic timing of option grants when such a practice is less prevalent and thus less noticeable in the nearby area, probably in order to avoid detection. We estimate that the marginal geographic effect on a given CEO's luck is 18.36{\%}, which is both statistically and economically significant. Our results suggest that regulators should look for corporate opportunistic behaviour where it is not expected.",
author = "Pandej Chintrakarn and Napatsorn Jiraporn and Pornsit Jiraporn",
year = "2014",
month = "1",
day = "1",
doi = "10.1080/13504851.2013.826866",
language = "English (US)",
volume = "21",
pages = "125--128",
journal = "Applied Economics Letters",
issn = "1350-4851",
publisher = "Routledge",
number = "2",

}

Geography and CEO luck : where do CEOs tend to be lucky? / Chintrakarn, Pandej; Jiraporn, Napatsorn; Jiraporn, Pornsit.

In: Applied Economics Letters, Vol. 21, No. 2, 01.01.2014, p. 125-128.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Geography and CEO luck

T2 - where do CEOs tend to be lucky?

AU - Chintrakarn, Pandej

AU - Jiraporn, Napatsorn

AU - Jiraporn, Pornsit

PY - 2014/1/1

Y1 - 2014/1/1

N2 - CEOs are 'lucky' when they receive stock option grants on days when the stock price is the lowest in the month of the grant, implying opportunistic timing (Bebchuk et al., 2010). We extend Bebchuk et al. (2010) by investigating the geographic peer effects of CEO luck. Our evidence shows that a CEO is significantly more likely to be lucky when other CEOs in the surrounding area are not lucky. It appears that a CEO tends to practice opportunistic timing of option grants when such a practice is less prevalent and thus less noticeable in the nearby area, probably in order to avoid detection. We estimate that the marginal geographic effect on a given CEO's luck is 18.36%, which is both statistically and economically significant. Our results suggest that regulators should look for corporate opportunistic behaviour where it is not expected.

AB - CEOs are 'lucky' when they receive stock option grants on days when the stock price is the lowest in the month of the grant, implying opportunistic timing (Bebchuk et al., 2010). We extend Bebchuk et al. (2010) by investigating the geographic peer effects of CEO luck. Our evidence shows that a CEO is significantly more likely to be lucky when other CEOs in the surrounding area are not lucky. It appears that a CEO tends to practice opportunistic timing of option grants when such a practice is less prevalent and thus less noticeable in the nearby area, probably in order to avoid detection. We estimate that the marginal geographic effect on a given CEO's luck is 18.36%, which is both statistically and economically significant. Our results suggest that regulators should look for corporate opportunistic behaviour where it is not expected.

UR - http://www.scopus.com/inward/record.url?scp=84885924666&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84885924666&partnerID=8YFLogxK

U2 - 10.1080/13504851.2013.826866

DO - 10.1080/13504851.2013.826866

M3 - Article

AN - SCOPUS:84885924666

VL - 21

SP - 125

EP - 128

JO - Applied Economics Letters

JF - Applied Economics Letters

SN - 1350-4851

IS - 2

ER -