Independent legal directors’ attitudes toward bank CEO stock option awards

IF 1 3区社会学 Q3 ECONOMICS

European Journal of Law and Economics Pub Date : 2024-06-27 DOI:10.1007/s10657-024-09807-x

Guoping Liu, Jerry Sun

{"title":"Independent legal directors’ attitudes toward bank CEO stock option awards","authors":"Guoping Liu, Jerry Sun","doi":"10.1007/s10657-024-09807-x","DOIUrl":null,"url":null,"abstract":"<p>This study examines whether independent legal directors have more conservative attitudes toward bank CEO stock option awards compared to other independent directors. We find that the proportion of legal directors among independent directors is negatively associated with CEO stock option awards as a proportion of both total CEO compensation and total CEO stock-based compensation. Moreover, the negative effect of independent legal directorship on stock option awards is moderated by CEO ownership. Our findings indicate that independent legal directors are less willing to compensate bank CEOs with stock option awards than independent non-legal directors. However, their reluctance toward stock option awards is alleviated when bank CEOs are vulnerable to experiencing a greater wealth loss from risk-taking. Overall, we document that independent legal directors intend to constrain excessive bank risk-taking through restricting CEO stock option awards. It is worth exploring effective oversight mechanisms for bank boards to constrain risk-taking, and this study extends this research stream by revealing a specific channel that can facilitate independent directors to play an important role in overseeing bank risk-taking.</p>","PeriodicalId":51664,"journal":{"name":"European Journal of Law and Economics","volume":"11 1","pages":""},"PeriodicalIF":1.0000,"publicationDate":"2024-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"European Journal of Law and Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s10657-024-09807-x","RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}

引用次数: 0

Abstract

This study examines whether independent legal directors have more conservative attitudes toward bank CEO stock option awards compared to other independent directors. We find that the proportion of legal directors among independent directors is negatively associated with CEO stock option awards as a proportion of both total CEO compensation and total CEO stock-based compensation. Moreover, the negative effect of independent legal directorship on stock option awards is moderated by CEO ownership. Our findings indicate that independent legal directors are less willing to compensate bank CEOs with stock option awards than independent non-legal directors. However, their reluctance toward stock option awards is alleviated when bank CEOs are vulnerable to experiencing a greater wealth loss from risk-taking. Overall, we document that independent legal directors intend to constrain excessive bank risk-taking through restricting CEO stock option awards. It is worth exploring effective oversight mechanisms for bank boards to constrain risk-taking, and this study extends this research stream by revealing a specific channel that can facilitate independent directors to play an important role in overseeing bank risk-taking.

查看原文本刊更多论文

独立法律董事对银行首席执行官股票期权奖励的态度

本研究探讨了与其他独立董事相比，独立法律董事是否对银行 CEO 股票期权奖励持更保守的态度。我们发现，独立董事中法律董事的比例与 CEO 股票期权奖励占 CEO 薪酬总额和 CEO 股票薪酬总额的比例呈负相关。此外，独立法律董事对股票期权奖励的负面影响还受到 CEO 所有权的调节。我们的研究结果表明，与独立非法律董事相比，独立法律董事不太愿意用股票期权奖励来补偿银行首席执行官。然而，当银行首席执行官容易因承担风险而遭受更大的财富损失时，他们对股票期权奖励的不情愿程度就会减轻。总之，我们发现独立法律董事有意通过限制首席执行官的股票期权奖励来约束银行的过度风险承担。银行董事会制约风险承担的有效监督机制值得探索，本研究通过揭示一种特定渠道，促进独立董事在监督银行风险承担方面发挥重要作用，从而扩展了这一研究流派。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

European Journal of Law and Economics Multiple-

CiteScore

2.40

自引率

7.70%

发文量

期刊介绍： The European Journal of Law and Economics provides readers with high-quality theoretical and empirical research in which both the legal and economic dimensions merge and combine. The journal welcomes articles that promote a better understanding of legal phenomena, legal decisions made by judges, courts or regulatory agencies, and involving economic tools. Theoretical papers are welcome, provided they have a strong basis in law and economics. We also welcome case studies, as well as empirical analyses – including empirical legal studies – and experimental investigations. The European Journal of Law and Economics does not favor any particular topic, but does have a focus on new and emerging problems. European themes are particularly welcome, because we feel it is important to exploit Europe’s considerable institutional diversity in order to build a more robust body of theory and empirical evidence. However, the purpose of the journal is also to showcase the diversity of law and economics approaches, as supplied by an international mix of authors. Drawing on the support of respected scholars from around the world, who serve as consulting editors and editorial board members, the Editors wish to give contributing authors the opportunity to improve their papers, while also offering them a quick and efficient review process. Officially cited as: Eur J Law Econ