Fear the loss or welcome the gains? How stock options influence CEO risk-taking in corporate cleantech investments
David Bendig, Colin Schulz, Maximilian Möhwald, Patrick Pollok
Journal of Business Venturing · 2025 · Volume 40 · Issue 2
DOI: 10.1016/j.jbusvent.2024.106471
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.
Keywords
Behavioral agency theory, CEO stock options, Corporate cleantech investments, Founder CEO, Green transformation
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