Please use this identifier to cite or link to this item: https://doi.org/10.1007/s11156-006-7433-3
Title: Do executive stock option grants have value implications for firm performance?
Authors: Lam, S.-S. 
Chng, B.-F.
Keywords: Agency theory
Compensation
Endogeneity
Executive stock option grants
Firm performance
Issue Date: 2006
Source: Lam, S.-S.,Chng, B.-F. (2006). Do executive stock option grants have value implications for firm performance?. Review of Quantitative Finance and Accounting 26 (3) : 249-274. ScholarBank@NUS Repository. https://doi.org/10.1007/s11156-006-7433-3
Abstract: Consistent with predictions of agency theory, we find direct evidence that executive stock option grants have value implications for firm performance. This inference is drawn from evaluation of various motivations for the use of such grants in executive compensation: value enhancement, risk taking, tax benefit, signaling and cash conservation. We find consistent evidence for the value enhancement motivation to reduce agency costs. As well, they signal for positive price sensitive information. Our results reject the tax benefit and cash conservation motivations. This finding is robust after controlling for the endogenous character of executive stock option grants and other equity-based grants. © Springer Science + Business Media, Inc. 2006.
Source Title: Review of Quantitative Finance and Accounting
URI: http://scholarbank.nus.edu.sg/handle/10635/44529
ISSN: 0924865X
DOI: 10.1007/s11156-006-7433-3
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