Do CEOs Worry About Being Fired When Making Investment Decisions?

Largay III, James A.; Ran Zhang
February 2008
Academy of Management Perspectives;Feb2008, Vol. 22 Issue 1, p60
Academic Journal
The article discusses whether the risk of termination influences the decisions of chief executive officers (CEOs) regarding investment risks. Many corporations use executive compensation and bonus packages determined by performance to ensure executives represent the interests of shareholders. The author discusses a study that suggests executives with a higher risk of being fired avoid risky investments that might be favored by shareholders and that job security is a greater factor in executive decision making than stock options. The author suggests corporate boards should consider how the risk of termination affects corporate growth.


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