Risk-taking of bank CEOs and corporate innovation

Dien Giau Bui*, Yehning Chen, Chih Yung Lin, Tse Chun Lin

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    Abstract

    We find that banks with CEOs who postpone exercising deep in-the-money options are more likely to lend to firms that are smaller, riskier, and more engaged in corporate innovation. These borrowers also spend more on R&D than a matched sample after getting the loans. Subsequently, these borrowers have higher innovation outputs and achieve greater market valuations. Overall, our findings suggest that the bank CEOs who reveal a high risk-taking attitude by their option exercising behavior help facilitate technological progress via the syndicate loans.

    Original languageEnglish
    Article number102387
    JournalJournal of International Money and Finance
    DOIs
    StateAccepted/In press - 2021

    Keywords

    • Bank syndicate loan
    • CEO risk-taking attitude
    • Corporate innovation
    • R&D
    • Tobin's q

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