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Type: Journal article
Title: Tests of two optimal incentive models for executive stock options
Author: Canil, J.
Rosser, B.
Citation: Corporate Ownership and Control, 2011; 9(1):136-155
Publisher: Virtus Interpress
Issue Date: 2011
ISSN: 1727-9232
Statement of
Jean M. Canil, Bruce A. Rosser
Abstract: Using a unique data set, we test theoretical propositions relating to grant size and exercise price in determination of optimal executive compensation. For Hall and Murphy, pay-performance sensitivity does not behave as predicted with respect to CEO risk aversion and diversification, but the latter supports observed grant size while ATM grants exhibit positive abnormal returns as predicted. Consistent with Choe, exercise price is found inversely related to leverage. The unexpected positive relation between grant size and stock volatility is conjectured driven by CEOs’ influencing large grants, which are found associated with weak corporate governance but ameliorated by outside directors.
Keywords: Executive; stock options; optimal; grant size; exercise price; influence
Rights: Copyright status unknown
RMID: 0030012258
DOI: 10.22495/cocv9i1art9
Appears in Collections:Business School publications

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