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https://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 |
DOI: | 10.17578/16-3/4-3 |
Published version: | http://www.mfsociety.org/page.php?pageID=175 |
Appears in Collections: | Aurora harvest 4 Business School publications |
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