Please use this identifier to cite or link to this item: http://hdl.handle.net/2440/81856
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Type: Journal article
Title: Australian evidence on CEO option grants
Author: Canil, J.
Rosser, B.
Citation: Multinational Finance Journal, 2012; 16(3/4):225-260
Publisher: Multinational Finance Society
Issue Date: 2012
ISSN: 1096-1879
Statement of
Responsibility: 
Jean M Canil, Bruce A. Rosser
Abstract: We test the option incentive models of Hall and Murphy (2000, 2002) and Choe (2003). Hall and Murphy (2000, 2002) posit optimal grant size and exercise price contingent on the executive’s levels of risk aversion and private diversification. Choe (2003) relates these choices to firm characteristics, principally the target risk level and financial leverage. A unique hand-collected data set of Australian grants is employed, wherein exercises prices and grant sizes are unconstrained by taxation and accounting practices. The Hall and Murphy (2000, 2002) model is found to explain observed exercise prices while neither model satisfactorily explains grant sizes. However, there is some evidence that CEO influence is associated with larger grants than posited by these optimal incentive models, but does not impact on exercise prices.
Keywords: Executive; stock options; optimal; grant size; exercise price; governance
Rights: © Multinational Finance Society
RMID: 0020133933
DOI: 10.17578/16-3/4-3
Published version: http://www.mfsociety.org/page.php?pageID=175
Appears in Collections:Business School publications

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