IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v77y2025ics1544612325003800.html
   My bibliography  Save this article

Stock option compensation mitigates stock price crash risk due to managerial overconfidence: Evidence from Korea

Author

Listed:
  • Kim, Na-Youn
  • Lee, Juhan

Abstract

This study empirically examines the moderating effect of stock option compensation on the relationship between stock price crash risk and managerial overconfidence using data from listed firms in Korea between 2002 and 2020. Results show that delta of the price incentive component of stock option compensation is positively related to stock price crash risk, but the relationship is negative when we consider the interaction with managerial overconfidence. These findings suggest that a well-designed stock option compensation policy can effectively mitigate the negative impacts of CEO overconfidence on crash risk without additional internal control costs.

Suggested Citation

  • Kim, Na-Youn & Lee, Juhan, 2025. "Stock option compensation mitigates stock price crash risk due to managerial overconfidence: Evidence from Korea," Finance Research Letters, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:finlet:v:77:y:2025:i:c:s1544612325003800
    DOI: 10.1016/j.frl.2025.107117
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325003800
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.107117?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:77:y:2025:i:c:s1544612325003800. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.