The Impact of International Diversification and Industrial Diversification on CEO Stock Option

2008 ◽  
Author(s):  
Howard Lawrence ◽  
Hwei Cheng Wang
Keyword(s):  
International Diversification ◽  
Stock Option ◽  
Industrial Diversification ◽  
The Impact

Discretion in Financial Reporting: The Voluntary Adoption of Fair Value Accounting for Employee Stock Options

2004 ◽  
Vol 18 (2) ◽  
pp. 97-108 ◽  
Author(s):  
Dahlia Robinson ◽  
Diane Burton
Keyword(s):  
Financial Reporting ◽  
Fair Value ◽  
Stock Option ◽  
Employee Stock Options ◽  
Market Returns ◽  
Employee Stock Option ◽  
Accounting Reports ◽  
Voluntary Adoption ◽  
The Impact ◽  
Is Value

This paper investigates the market reaction to announcements by firms of their decision to adopt the fair value provisions of SFAS No. 123 in accounting for their employee stock option (ESO) expense. Additionally, this paper examines ESO usage and expense of adopting firms and compares the impact of the expense on profitability measures for adopting firms relative to a matched set of control firms. We find a positive and significant abnormal return in the three days around the adoption announcements, suggesting that the decision to expense using the fair value method is value relevant. The positive abnormal announcement returns are mainly attributable to the earlier announcements, consistent with early announcements serving as a credible signal of a commitment to transparency in financial reporting. We find evidence that in the three years prior to the announcement year, adopting firms report significantly higher earnings than control firms yet fail to earn higher market returns, suggesting that adopters stand to benefit the most by improving the market's perception of their accounting reports. We also find that ESO usage, ESO expense, and the impact of ESO expense on profitability are significantly lower for adopters relative to control firms, although the impact of ESO expense is economically significant for 43 percent of the adopters.

scholarly journals Corporate governance and IPO underpricing: evidence from the italian market

2021 ◽  
Author(s):  
Emanuele Teti ◽  
Ilaria Montefusco
Keyword(s):  
Corporate Governance ◽  
Initial Public Offering ◽  
Boards Of Directors ◽  
Stock Option ◽  
Board Members ◽  
Ipo Underpricing ◽  
Italian Market ◽  
Public Offering ◽  
The Impact ◽  
Positive Effect

AbstractThis paper aims to analyse the impact of firms’ corporate governance characteristics on the degree of first-day returns (i.e., underpricing) in the Italian initial public offering (IPO) market. In particular, this work investigates the impacts of the characteristics of boards of directors (BoDs) and ownership structure on the underpricing of newly offered shares. By studying a sample of 128 Italian IPOs between 2000 and 2016, it is concluded that corporate governance characteristics affect the degree of first-day returns following a company’s IPO. More specifically, the size of the BoD negatively affects underpricing, while the ownership of institutional investors and board members has a positive effect on the degree of underpricing. Conversely, no significant evidence is found with regard to board independence, the number of female directors in the boardroom, the implementation of stock option plans and ownership concentration.

scholarly journals DAMPAK STRUKTUR MODAL PADA SENSITIVITAS PENERAPAN KOMPENSASI OPSI SAHAM KARYAWAN TERHADAP KINERJA

2017 ◽  
Vol 14 (1) ◽  
pp. 1
Author(s):  
Nur Fadjrih Asyik
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Stock Options ◽  
Stock Option ◽  
Company Performance ◽  
Employee Stock Option ◽  
Sensitivity Level ◽  
The Impact ◽  
Option Compensation ◽  
Stock Option Compensation

This study aims to test whether the management that receive compensation in the form of stock options having an positive impact on company performance. This study considers the external performance measurement by identifying Cumulative Abnormal Return (CAR). In addition, this study aims to test whether the company's capital structure affects the sensitivity level of employee stock option compensation and firm performance. Capital structure is measured with debt to equity ratio. The result indicates that the proportion of Employee Stock Option Plan (ESOP) influence company performance in accordance with the predictions. This shows that the more stock options offered to employees then came a sense of belonging which resulted in more motivated managers to improve company performance. Furthermore, the higher the market performance of companies that can be achieved, the higher the profit (gain) will be obtained by the recipient of stock options. In addition, this study also shows that the impact of stock option grants at the company's performance declined with the greater capital structure of liability. This shows that the capital structure of liabilities will lower the sensitivity level of employee stock option compensation and firm performance. The higher the company's liabilities would reduce the rights of the owner of the dividends each period in accordance with the ownership of shares held since the company must take into account the interest costs to be paid to the creditor.

Accrual management and the decision to sell or hold shares acquired from the exercise of employee stock options

2020 ◽  
pp. 0000-0000
Author(s):  
Thomas Smith ◽  
G. Ryan Huston ◽  
Richard M. Morton
Keyword(s):  
Stock Option ◽  
Employee Stock Options ◽  
Short Term ◽  
Post Exercise ◽  
Employee Stock Option ◽  
Holding Period ◽  
Before And After ◽  
Accrual Management ◽  
The Impact

This study extends the employee stock option literature by examining the impact of accrual management, before and after stock option exercise, on the timing of sales of shares acquired at exercise. We find evidence that accrual management prior to exercise is positively associated with the decision to quickly sell shares after exercise, facilitating a short-term exercise-and-sell strategy. Alternatively, we find that, among executives initially choosing to hold at exercise, tax incentives appear to drive both post-exercise accrual management and the timing of sale transactions. Specifically, our results suggest that executives use income-increasing accruals during the holding period to bolster their stock option gains sand then sell immediately after satisfying the minimum (twelve month) holding period for long-term capital gain treatment. These results provide context for prior research that found evidence of earnings management leading up to option exercise on the expectation of an immediate sale.

scholarly journals International diversification and firm’s value: evidence from developing nations

2016 ◽  
Vol 26 (2) ◽  
pp. 166-183 ◽  
Author(s):  
A.N. Bany-Ariffin ◽  
Bolaji Tunde Matemilola ◽  
Liza Wahid ◽  
Siti Abdullah
Keyword(s):  
Financial Performance ◽  
Multinational Corporations ◽  
Multinational Firms ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
International Diversification ◽  
Technological Advancement ◽  
Reverse Causality ◽  
Content Type ◽  
The Impact

Purpose This paper aims to evaluate the impact of international diversification, through the investment abroad activities of the Malaysian multinational corporations (MNCs), on their financial performance. Design/methodology/approach The paper applies the panel generalized method of moments (GMM) estimation technique that gives better results. Findings The empirical findings show that the move to invest abroad has brought a positive impact on Malaysian MNCs’ financial performance. However, in terms of a firm’s risk, the results contradict the general internationalization-risk hypothesis. Research limitations/implications The study focuses on the top 100 multinational firms; future researchers may extend the time period and use the entire sample of all the multinational firms. Practical implications Foreign investments offer rewarding returns due to cheaper labour and raw materials, competitive edge in terms of technological advancement and larger market opportunities. Originality/value The paper contributes to the literature using the panel GMM’s estimation that effectively control for reverse causality and serial correlation problem. The paper also contributes to the international diversification and performance relationship, in a fast-growing Malaysia.

scholarly journals The incentives of Australian companies to utilize executive stock option plans

2003 ◽  
Vol 1 (2) ◽  
pp. 137-149 ◽  
Author(s):  
Jenny Goodwin ◽  
Pamela Kent
Keyword(s):  
Chief Executive Officer ◽  
Chief Executive ◽  
International Diversification ◽  
Stock Option ◽  
Investment Opportunity ◽  
Executive Stock Option ◽  
Investment Opportunity Set ◽  
Ex Ante ◽  
Firm Leverage

This study investigates the firm specific characteristics which provide ex ante incentives to Australian companies to utilize an executive stock option (ESO) plan. We hypothesize that the remuneration of the Chief Executive Officer, the firm’s investment opportunity set, the level of leverage and the degree of international diversification of the firm are related to the firm’s utilization of an ESO plan. Using a sample of 378 firms drawn from the largest 500 firms in Australia, we find that the results support our hypotheses, with the exception of the level of firm leverage.

scholarly journals Factores facilitadores e inhibidores del incremento del grado de diversificacion en las empresas de Castilla y León

2008 ◽  
pp. 185
Author(s):  
Almudena Martínez Campillo
Keyword(s):  
Firm Size ◽  
Strategic Change ◽  
Organizational Factors ◽  
International Diversification ◽  
Interaction Effects ◽  
Product Diversity ◽  
Initial Product ◽  
Industrial Diversification ◽  
Logit Regression ◽  
Castilla Y Leon

El presente trabajo estudia tres factores organizativos que pueden facilitar o inhibir el incremento del nivel de diversificación industrial: el tamaño corporativo, la diversificación internacional y la diversidad de producto inicial. En concreto, pretende analizar los efectos principales e interacción de dichos factores sobre la probabilidad de que las empresas aumenten el número de negocios donde participan. Para ello, tras revisar la literatura sobre diversificación y cambio estratégico, se plantean una serie de hipótesis, cuyo contraste se efectúa aplicando un análisis de regresión Logit. Los resultados indican que tanto el tamaño como la internacionalización de una empresa obstaculizan su crecimiento hacia nuevas líneas de actividad. Asimismo, este trabajo revela la existencia de interacciones significativas entre ambas variables y la diversidad de producto inicial que influyen favorablemente en el incremento de la diversificación industrial.<br /><br />This study examines three organizational factors that may facilitate or inhibit the increase in industrial diversification: firm size, international diversification and initial product diversity. Specifically, the goal is to analyze their main and interaction effects on firms propensity to enhance the number of business segments in which they operate. After revising literature on diversification and strategic change, the study proposes a number of hypotheses that are contrasted by applying a Logit regression. Results indicate that size and internationalization of the firm restrain significantly its growth toward new activities. Also, our findings reveal that there are significant interactions among both variables and the initial product diversity that affect positively on the increase in industrial diversification.<br />

scholarly journals The impact of managerial stock option on firm risk taking: evidence from China

Pressacademia ◽  
2019 ◽  
Vol 8 (2) ◽  
pp. 101-113
Author(s):  
Ratny Seng ◽  
Kimly Heng ◽  
Gao-Liang Tian ◽  
Mohammad Arshad Arif ◽  
Hua Feng
Keyword(s):  
Risk Taking ◽  
Stock Option ◽  
Firm Risk ◽  
The Impact
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