We investigate the relationship between CEO risk incentives and the innovation premium (IP) proposed by Forbes. We … suggest that compared to traditional proxies of innovation, the IP is a comprehensive measure of a firm’s overall innovation … and, therefore can measure innovation in broader industries. We find that both option vega and vega-to-delta ratio, as …

firm risk, even in the presence of strong risk taking incentives. Our results are robust to controls for the sensitivity of … CEO wealth to stock price changes, firm risk determinants, the endogenous feedback effects of firm risk on CEO incentives …

%. The Pay Gap between the CEO and its subordinate executives (tournament incentives) also plays a major role in lowering IPO … failure risk. The effectiveness of CEO pay is strengthened among well-governed firms, whereas tournament incentives are …