This paper investigates the consequences of stock price crashes. I find that stock price crash risk subsequently reduces managerial confidence levels, as proxied by the CEO's option-based and earnings call transcript's text-based measures. I also find that stock price crash risk reduces CEO compensation and equity incentives, suggesting that a firm seeks to adjust managerial incentives after its stock price crashes to prevent future occurrences. Furthermore, CEOs with high confidence are more likely to curtail overinvestment after their crash experiences relative to others, thereby contributing to shareholder value. Overall, this paper provides novel evidence that CEOs and firms appear to learn from their experiences of stock price crashes, suggesting that stock price crashes may induce experience-driven conservatism that influences CEO and corporate decisions.

中文翻译：

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股价暴跌的教训：管理层信心和激励措施的变化


本文调查了股价崩盘的后果。我发现股价崩盘风险随后会降低管理层的信心水平，正如 CEO 基于期权和财报电话会议记录基于文本的衡量标准所表明的那样。我还发现，股价崩盘风险会降低 CEO 的薪酬和股权激励，这表明公司在股价崩盘后寻求调整管理激励措施，以防止未来发生。此外，相对于其他人，信心高的 CEO 更有可能在经历崩盘后减少过度投资，从而为股东价值做出贡献。总体而言，本文提供了新的证据，表明 CEO 和公司似乎从他们的股价崩盘经验中吸取了教训，这表明股价崩盘可能会诱发影响 CEO 和公司决策的经验驱动的保守主义。