Executive Stock Options and Manipulated Stock-Price Performance: Evidence from Retiring CEOs
نویسندگان
چکیده
Previous studies have examined the manipulation of executive stock option awards and exercises, focusing on information timing by managers. In this paper, we investigate potential managerial manipulation of stock-price performance motivated by executive stock options. To distinguish performance manipulation from information timing, we examine stock-price performance surrounding the departure of retiring CEOs, whose stock options typically expire shortly after their departure and whose chances to manipulate option awards and exercises are minimized. Consistent with manipulated performance, we find significant abnormal stock returns in the months surrounding CEO departure for those with high option holdings, which are reversed shortly after CEO departure. JEL classification: G30 ; J33 ; M41 ; M52
منابع مشابه
The Incentives of Equity-Based Compensation and Wealth
This study estimates chief executive officers’ (CEO) subjective valuation of their equity holdings using their revealed preferences conveyed by their decisions to hold or exercise their stock options and to hold or sell their equity shares. Using a random utility framework, I find that the subjective value of equity holdings is associated with both economic and behavioral factors, and that the ...
متن کاملA Long-term Casual Nexus between Stock Price and Dividends: Empirical Evidence from the Accepted Firms in Tehran Stock Exchange
this world; though all the discussions are focused on the causal relationships in allthe scientific arguments. One of the methods to study the designed causal relationshipsobjectively is Granger causality test. This paper aims to investigate the longtermcausal relationship between the stock price and dividends. The statisticalpopulation includes 180 active companies in Stock Exchange of Tehran ...
متن کاملValuation of Executive Stock Options
It has been common practice to provide executives of firms with executive stock options as a part of the compensation package; such options are available both in US and Australia. These executive stock options are call options with additional restrictions. Until recently, the executive stock options were not required to be disclosed in the financial reports of the firms. But this has changed du...
متن کاملStudying the Dividend Policy and Share Price Volatility: Iran Evidence
Explaining dividend policy has been one of the most difficult challenges facing financial economists. Despite decades of study, we have yet to completely understand the factors that influence dividend policy and the manner in which these factors interact.The aim of this paper is to examine the relation between dividend policy and share price volatility in Tehran Stock Exchange (TSE). The analys...
متن کاملOutside options and CEO turnover: The network effect
Article history: Received 17 September 2013 Received in revised form 1 March 2014 Accepted 11 March 2014 Available online 19 March 2014 Most studies consider chief executive officer (CEO) turnover from the firm's perspective. In this paper, I suggest that the labor market conditions for CEOs affect turnover outcomes. I use CEOs' positions on corporate executive and director networks to assess t...
متن کامل