Fear the loss or welcome the gains? How stock options influence CEO risk-taking in corporate cleantech investments

Bendig, David; Schulz, Colin; Möhwald, Maximilian; Pollok, Patrick

Research article (journal) | Peer reviewed

Abstract

This study draws on the behavioral agency model to investigate how stock options incentivize CEO risk-taking related to investments in external clean technology (cleantech) ventures. Using longitudinal data from 540 publicly traded firms, we find that current option wealth is negatively associated with corporate cleantech investments while prospective option wealth is positively associated. The results show that founder CEOs, who exhibit different endowment and risk-bearing patterns than hired CEOs, do not perceive cleantech investments as mixed gambles. These findings advance understanding of the interplay between equity-based incentives, CEO characteristics, and incumbents' pursuit of sustainable business practices.

Details about the publication

JournalJournal of Business Venturing
Volume40
Issue2
Page range106471null
StatusPublished
Release year2025
Language in which the publication is writtenEnglish
DOI10.1016/j.jbusvent.2024.106471
Link to the full texthttps://www.sciencedirect.com/science/article/pii/S0883902624000934
KeywordsCorporate cleantech investments; Behavioral agency theory; CEO stock options; Founder CEO; Green transformation

Authors from the University of Münster

Bendig, David
Professorship of Entrepreneurship (Prof. Bendig)
Möhwald, Maximilian
Chair for Entrepreneurship (Prof. Bendig) (ENT)
Schulz, Colin
Professorship of Entrepreneurship (Prof. Bendig)