The Early Exercise of Executive Stock Options and Firms’ Future Systematic and Idiosyncratic Risks

2011 ◽  
Author(s):  
Anup Srivastava
Keyword(s):  
Stock Options ◽  
Executive Stock Options ◽  
Early Exercise

Does Corporate Governance Curb Managers’ Opportunistic Behavior of Exploiting Inside Information for Early Exercise of Executive Stock Options?

2016 ◽  
Vol 19 (01) ◽  
pp. 1650006 ◽  
Author(s):  
Chin-Chen Chien ◽  
Cheng-Few Lee ◽  
She Chih Chiu
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Stock Options ◽  
Executive Stock Options ◽  
Opportunistic Behavior ◽  
Governance Mechanisms ◽  
Inside Information ◽  
Early Exercise ◽  
Corporate Governance Mechanisms

This paper aims to investigate the role of corporate dividend policy and corporate governance in managerial timing decisions with regard to large exercise of executive stock options (ESOs). The findings indicate that the motivations behind managers’ decisions to exercise abnormally large ESOs vary depending on the strength of the related corporate governance mechanisms. Managers of weakly governed companies exploit abnormal earnings management when timing large exercises of ESOs. In contrast, managers of well-governed companies behave rationally in timing large exercises of ESOs, carrying them out in years in which their companies significantly raise dividend payouts.

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