부산대학교 도서관

CEOs actively intervene in major management decisions to make decisions that maximize corporate profits and carry out corporate management activities. However, the judgment of risky investment project decisions appears differently depending on the CEO's personal disposition. The higher themanagerial overconfidence, the underestimating the negative information of the company, resulting in crash risk in the stock market. The performance compensation policy is used as an alternative to maximizing corporate value by removing the effect of overconfidence that may occur in the decision-making process of managers and reducing the crash risk. In particular, the stock option compensation policy can reduce the agency problemand increase shareholders' profits, as the CEO's compensation is linked to the value of the stock, and it will be possible to control crash risk due to the managerial overconfidence. Therefore, in this study, the crash risk that can occur due to themanagerial overconfidence and the effectiveness of the compensation policy to check it are verified. Specifically, we shall prove that the crash risk can be affected by controlling the managerial overconfidence by using delta, which is a proxy for price inducement, and vega, which is a proxy for risk inducement. Through verifying the relevance between compensation policies for managers and actual decision-making, it was demonstrated empirically that the stock option compensation policy can control the crash risk that may occur due to the managerial overconfidence. So far, studies have focused on cash compensation on CEOs' compensation, but we expanded the study to stock option compensation policies and empirically verified that stock option compensation can reduce the crash riske by controlling managerial overconfidence.