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Article
CEO OVERCONFIDENCE, EQUITY INCENTIVES AND COST STICKINESS
Juanjuan Xu, Hui Lin
ABSTRACT: This paper studies the effects of equity incentive and CEO overconfidence on cost stickiness. Overconfident CEO tends to form optimistic expectations for the future, leading to higher cost stickiness. By reducing the opportunistic behavior, the implementation of equity incentive not only significantly reduces cost stickiness, but also weakens the impact of CEO overconfidence on cost stickiness. Moreover, Female CEO and restricted stock incentive help mitigate cost stickiness and moderate the impact of CEO overconfidence on cost stickiness. Those findings contribute to the literature on the consequences of equity incentive and overconfidence, and enrich the research on the role of female executives in corporate governance.
KEYWORDS: overconfidence, cost stickiness, female CEO, stock option, restricted stock.
JEL classification: M41.