Sports Inspiration and Executive Compensation

This study examines the influence of sports inspiration on executive compensation. We find that major U.S. professional sports victories of local teams increase the vega, albeit not the total pay and the delta, of executive compensation in local firms. The inference remains after a battery of robustness tests. The effect is more pronounced for male executives, chief executive officers, and executives of firms with low R&D expenditure and operating in non-high-tech industries. Our results suggest that sports victories inspire risk-taking in the executives' compensation structure. Overall, our findings highlight a novel behavioral factor in shaping executive compensation.