Abstract
The purpose of this study was to investigate (a) the moderating effect of CEO overconfidence on the relationship between equity-based compensation and strategic risk-taking and (b) the relationship between franchising and strategic risk-taking in the U.S. restaurant industry. Given wide use of a franchise system among U.S. restaurant firms, an understanding of the association between equity-based compensation and strategic risk-taking relative to CEOs’ risk behaviors seems particularly important. We conducted our empirical analysis in the U.S. restaurant industry using a sample of 659 firm-year observations from 1992 to 2013. Our findings showed that (a) overconfident CEOs, while holding equity-based compensation, tended to take on more strategically risky investments, and (b) there was a positive relation between franchising and risk-taking. Considering the behavioral and industry-specific characteristics, study findings could provide a more comprehensive understanding of how equity-based compensation influences strategic risk-taking in the U.S. restaurant industry.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 224-259 |
| Number of pages | 36 |
| Journal | Journal of Hospitality and Tourism Research |
| Volume | 42 |
| Issue number | 2 |
| DOIs | |
| State | Published - Feb 1 2018 |
All Science Journal Classification (ASJC) codes
- Education
- Tourism, Leisure and Hospitality Management
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