Please use this identifier to cite or link to this item: http://scholarbank.nus.edu.sg/handle/10635/14371
Title: The determinants of executive stock option grants and the link between executive stock option grants and firm performance
Authors: CHNG BEY FEN
Keywords: stock option, endogeneity, firm performance, risk taking, signalling, compensation
Issue Date: 29-Nov-2004
Source: CHNG BEY FEN (2004-11-29). The determinants of executive stock option grants and the link between executive stock option grants and firm performance. ScholarBank@NUS Repository.
Abstract: My study investigates the determinants of executive stock option grants. I also examine how executive stock option grants are associated with firm performance in the presence of these determinants. To investigate the determinants of executive stock option grants, my study tests hypotheses concerning value enhancement, risk taking, tax saving, signalling and cash conservation motivation for executive stock option grants. My findings show that executive stock option grants are endogenously determined by the firma??s contracting environment, with value enhancement and signalling motivation being statistically significant in my data. Controlling for endogeneity, my results show an equilibrium functional form of executive stock option grants and firm performance that is U-shaped. This U-shaped function suggests that firms granting either few or many executive stock options are associated with high performance. The results imply that executive stock option grants may not always be the best compensation tool for all companies. However, agency theory is important because consistent with the prediction of principal-agent model, executive stock option grants are explained by the key variables in the contracting environment (Himmelberg et al. (1999)).
URI: http://scholarbank.nus.edu.sg/handle/10635/14371
Appears in Collections:Master's Theses (Open)

Show full item record
Files in This Item:
File Description SizeFormatAccess SettingsVersion 
CHNG_BEY_FEN.pdf320.41 kBAdobe PDF

OPEN

NoneView/Download

Page view(s)

202
checked on Dec 11, 2017

Download(s)

146
checked on Dec 11, 2017

Google ScholarTM

Check


Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.