Work

Do corporations award CEO stock options effectively?

Year: 1995

Type: article

Abstract: This paper analyzes stock option awards to CEOs of 792 U.S. public corporations between 1984 and 1991. Using a Black-Scholes approach, I test whether stock options' performance incentives have significant associations with explanatory variables related to agency cost reduction. Further tests examine whether the mix of compensation between stock options and cash pay can be explained by corporate liquidity, tax status, or earnings management. Results indicate that few agency or financial contracting theories have explanatory power for patterns of CEO stock option awards.

Source: Journal of Financial Economics

DOI: 10.1016/0304-405x(95)00829-4

Author: David Yermack

Institution: New York University

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $4,740

OpenAlex ID: W2088111862

FWCI: 12.8

Cites: 41

Cited by: 1,092

Related to: 10