LAUSR

This study takes a step forward in addressing the influence of stock options on executive risk-taking behavior, examining the moderating role of the executive hierarchy—CEOs versus non-CEO executives—and the gender effect within these corporate positions. Panel data analysis for matched samples of S&P 1500 listed firms between 2006 and 2011 confirms both hierarchical and gender differences in the relationship between executive stock options (ESOs) and risk taking. The maximum wealth at risk at which risk-increasing behavior changes to risk-reducing behavior—in the inverted U-shaped relationship—is higher for CEOs than for non-CEO executives, while gender differences in the ESO risk-taking effect are stronger at the level of CEOs. Thus, our evidence shows the importance of considering executive’s decision-making freedom (by means of hierarchy) in order to predict risk preferences according to executive gender.