scholarly journals Motives of Stock Option Incentive Design, Ownership, and Inefficient Investment

2018 ◽  
Vol 10 (10) ◽  
pp. 3484 ◽  
Author(s):  
Wei Shan ◽  
Ran An
Keyword(s):  
Panel Data ◽  
Stock Options ◽  
Stock Option ◽  
Share Price ◽  
Incentive Design ◽  
Price Movement ◽  
Chinese Listed Companies ◽  
Different Types ◽  
And Performance ◽  
Stock Option Incentive

This paper analyzes the effects of stock option incentives on inefficient investment. Specifically, based on the motive of design, we divide stock option incentives into incentive-driven and welfare-driven incentives. Our research is based on the panel data of 511 Chinese listed companies that declared stock option incentives from 2010 to 2014, including both incentive-driven and welfare-driven incentives. Our research shows that different types of stock option incentives have different effects on inefficient investment. Generally, incentive-driven stock option incentives reduce inefficient investment, whereas welfare-driven stock option incentives do not reduce inefficient investment, but increase it. However, there is a weakening effect in state-owned enterprises due to two opposite factors, numerous restrictions and more self-interested managers. Additionally, the paper provides implications that some stock options are manipulated by managers in the designing stage in order to pursue self-interests, and therefore monitoring abnormal share price movement and performance hurdles is important to safeguard the wealth of shareholders and promote effective motivation for managers.

Accounting for Employee Stock Options

2004 ◽  
Vol 18 (2) ◽  
pp. 135-156 ◽  
Author(s):  
Michael Kirschenheiter ◽  
Rohit Mathur ◽  
Jacob K. Thomas
Keyword(s):  
Stock Options ◽  
Financial Statements ◽  
Cash Flows ◽  
Stock Option ◽  
Share Price ◽  
Employee Stock Options ◽  
Deferred Taxes ◽  
Recommended Treatment ◽  
Option Values ◽  
The Common

Accounting for employee stock options is affected by whether outstanding options are viewed as equity or liabilities. The common perception is that the FASB's recommended treatment (per SFAS No. 123), which is based on the options-as-equity view, results in representative financial statements. We argue that this treatment distorts performance measures for three reasons. First, the deferred taxes associated with nonqualified options should also be included as equity, but are not. Second, since unexpected share price changes affect optionholders and equityholders differently, combining their interests provides an average earnings effect that is not representative for either group. We show that efforts to isolate the interests of common stockholders via diluted earning per share calculations (per SFAS No. 128) are inherently incapable of identifying wealth transfers between stockholders and optionholders. Finally, projections of future cash flow statements prepared under SFAS No. 95 overstate cash flows to current equityholders by the pretax value of projected option grants. We show that these distortions can be avoided simply by accounting for options as liabilities at grant and thereafter recognizing changes in option values (similar to the accounting for stock appreciation rights). Our analysis of stock option accounting leads to two, more general implications: (1) all securities other than common shares should be treated as liabilities, thereby simplifying the equity versus liability distinction, and (2) these liabilities should be recorded at fair values, thereby obviating the need to consider earnings dilution.

scholarly journals EXECUTIVE STOCK OPTION PLANS: UJI PENGELOLAAN LABA SELAMA VESTING PERIOD

2018 ◽  
Vol 14 (4) ◽  
pp. 478-500
Author(s):  
Nur Fadjrih Asyik
Keyword(s):  
Stock Options ◽  
Stock Exchange ◽  
Early Stage ◽  
Financial Statements ◽  
Stock Option ◽  
Share Price ◽  
Executive Stock Option ◽  
Grant Program ◽  
Final Sample ◽  
A Company

This study examine earnings management behavior related to compensation in the form of stock options during implementation of the grant program (vesting period). The study also examine and identify the differences in behavior during the execution of stock options. Companies as a sample in this study is a company listed in the Indonesia Stock Exchange, which has adopted the Executive Stock Option Plan and restricted to the companies that publish financial statements as of December 31 for the year 2007 to 2009. Final sample of this research into as many as 21 sample companies and the number of observations are 63 observational studies. The result of testing H1 shows that the more stock options offered to employees, the managers more motivated to manage earnings down prior to offering stock options. The results are consistent with previous studies of the behavior of managers who expect the share price decline before the date of grant, so the manager to pay compensation for stock options with a relatively cheap price. The results of testing H2a and H2b show that the more stock options offered to employees, the managers more motivated to manage earnings upward after offering stock options. Results show that an early stage implementation of executive stock option plans, executives trend to behave increasing income until vesting period final

Union Coverage, Membership and Performance-Related Pay: Are Piece Rates Different?

2013 ◽  
Vol 226 ◽  
pp. R30-R41 ◽  
Author(s):  
Patrick O'Halloran
Keyword(s):  
Panel Data ◽  
Profit Sharing ◽  
Piece Rate ◽  
Union Coverage ◽  
Bonus Payments ◽  
Different Types ◽  
And Performance ◽  
To Receive ◽  
Union Contract ◽  
Piece Rates

This paper revisits a literature on the links between unionisation and performance-related pay (PRP), which offers a disparate set of results. Part of the reason for this is the usual inability to distinguish between different types of PRP and the lack of rich panel data containing such measures. Analysis of panel data containing six separate PRP schemes reveals that union members are less likely to receive PRP in general and less likely to receive bonus payments, stock options, or profit sharing than non-members. Furthermore, profit sharing is negatively related to both union membership and coverage. However, union members or those covered by a union contract are more likely to be paid piece rates, providing further evidence that piece-rate pay differs from other forms of PRP.

scholarly journals EXECUTIVE STOCK OPTION PLANS: UJI PENGELOLAAN LABA SELAMA VESTING PERIOD

2017 ◽  
Vol 14 (4) ◽  
pp. 478
Author(s):  
Nur Fadjrih Asyik
Keyword(s):  
Stock Options ◽  
Stock Exchange ◽  
Early Stage ◽  
Financial Statements ◽  
Stock Option ◽  
Share Price ◽  
Executive Stock Option ◽  
Grant Program ◽  
Final Sample ◽  
A Company

This study examine earnings management behavior related to compensation in the form of stock options during implementation of the grant program (vesting period). The study also examine and identify the differences in behavior during the execution of stock options. Companies as a sample in this study is a company listed in the Indonesia Stock Exchange, which has adopted the Executive Stock Option Plan and restricted to the companies that publish financial statements as of December 31 for the year 2007 to 2009. Final sample of this research into as many as 21 sample companies and the number of observations are 63 observational studies. The result of testing H1 shows that the more stock options offered to employees, the managers more motivated to manage earnings down prior to offering stock options. The results are consistent with previous studies of the behavior of managers who expect the share price decline before the date of grant, so the manager to pay compensation for stock options with a relatively cheap price. The results of testing H2a and H2b show that the more stock options offered to employees, the managers more motivated to manage earnings upward after offering stock options. Results show that an early stage implementation of executive stock option plans, executives trend to behave increasing income until vesting period final.

Stock option pay versus restricted stock: A comparative analysis of their impact on managerial risk-taking and performance extremeness

2018 ◽  
Vol 18 (2) ◽  
pp. 301-329 ◽  
Author(s):  
Wanrong Hou ◽  
Steve Lovett ◽  
Abdul Rasheed
Keyword(s):  
Comparative Analysis ◽  
Risk Taking ◽  
Stock Options ◽  
Stock Option ◽  
Large Sample ◽  
Managerial Risk ◽  
Ceo Tenure ◽  
Restricted Stock ◽  
And Performance ◽  
Using Data

This study investigates how two stock-based incentives affect the risk-taking behavior of CEOs. We compare stock options and restricted stock in terms of their impact on the magnitude of investments and performance extremeness. We test our hypotheses using data for 23 years starting from 1993 for a large sample of S&P 1500 firms. Our results indicate that both stock option and restricted stock pay increase the magnitude of investments undertaken by CEOs, but that stock options have a much stronger effect. Also, stock option pay increases the likelihood of both big gains and big losses, but restricted stock reduces the likelihood of big losses. Finally, we find that as CEO tenure increases, the effects of stock-based compensation tend to diminish. Therefore, stock-based incentives appear to be a useful solution to the agency problem for short-tenured CEOs, but much less so for long-tenured CEOs.

Stock Options and Total Payout

2009 ◽  
Vol 44 (2) ◽  
pp. 391-410 ◽  
Author(s):  
Charles J. Cuny ◽  
Gerald S. Martin ◽  
John J. Puthenpurackal
Keyword(s):  
Panel Data ◽  
Stock Options ◽  
Fixed Effects ◽  
Stock Option ◽  
Executive Stock Options ◽  
Ceteris Paribus ◽  
Earnings Per Share

AbstractIn this paper, we examine how stock option usage affects total corporate payout. Using fixed-effects panel data estimators on various samples of ExecuComp firms from 1993 to 2005, we find the higher the executive stock options, the lower the total payout, ceteris paribus. We also find some evidence that firms increase payouts through repurchases in order to offset earnings per share dilution that occurs due to usage of executive and non-executive stock options. However, incentives from not having dividend protection for options appear to dominate those from antidilution, resulting in lower total payout for firms with higher options usage.

scholarly journals A Basic Technical Analysis of Shares on the Example of a Specific Company

2021 ◽  
Vol 91 ◽  
pp. 01041
Author(s):  
Jakub Horak ◽  
Jiri Sulek
Keyword(s):  
Data Collection ◽  
Stock Price ◽  
Technical Analysis ◽  
Price Increase ◽  
Share Price ◽  
Moving Averages ◽  
Price Movement ◽  
Different Types ◽  
Trading Volumes ◽  
The Given

This paper deals with the technical analysis of The Coca-Cola Company (KO) shares. The first signal for the stock price movement was created on the basis of the intersections of moving averages, namely after intersecting the shorter average through the longer average. This signal signifies a drop in the share price. The same signal was generated after comparing the trend of the share price and the trend of the trading volumes. It is these particular trends that have a different direction. Consequently, this is an indicator for a decline in the share price. The last signal created a graphical pattern called symmetric bear triangle which also predicts a drop in the stock price. Only one indicator did not generate a signal for price increase or decrease, namely the RSI with a 14-day period. The examined data collection contains data from 2.1.2015 to 29.4.2020. At the same time, all presented results and predictions are based on the date of April 29, 2020. Finally, the use of the given indicators for different titles, assets or for different types of trade with different lengths is evaluated and proposed. The paper provides suggestions of measures for investors and speculators which should be applied before the start of the analysis.

scholarly journals Stock-based compensation plan: an analysis of the determinants of its use

2020 ◽  
Vol 31 (82) ◽  
pp. 84-98
Author(s):  
Marcelo Daniel Araujo Ermel ◽  
Vanessa Medeiros
Keyword(s):  
Panel Data ◽  
Stock Options ◽  
Fixed Effects ◽  
Statistical Treatment ◽  
Minority Shareholders ◽  
Compensation Plans ◽  
Systematic Risks ◽  
Compensation Plan ◽  
And Performance ◽  
Market Variables

ABSTRACT This study’s aim was to investigate the main aspects that determined the use of the stock-based compensation model and the variables that influence the amount paid. The article fills the gap in the previous debate regarding the variables that affect the decision to offer stock-based remuneration, as well as revealing the factors that impact its magnitude and providing a more robust statistical treatment with regards to endogeny. Brazil is known to be a country where the agency conflict between controlling and minority shareholders predominates, and so it is important to understand the determinants of adoption and of the amount paid to managers using stock options, since remuneration can be used as a form of tunneling. This study identified a possible trade-off between cash and stock compensation, in view of increased company indebtedness. It also found that in the Brazilian market this type of remuneration is not related to governance and performance. A panel data regression was used with fixed effects in the firm and industry*year to eliminate the possible bias arising from constant heterogeneities in time for the firms and shocks in the industries in a particular year. In addition, to identify the determinants, we used a logistic regression with panel data and fixed effect in industry*year. The study sample comprised 287 companies listed on the Bolsa, Brasil, Balcão (B3) exchange. This research shows that 40% of the companies in the period from 2010 to 2016 adopted stock-based compensation plans; however, the amount paid is still low, at 0.03% of total company assets. The results indicate that in the Brazilian market variables such as investment opportunities and company size increase the likelihood of adopting the employee stock options plan (ESOP). In addition, regarding the amount paid, this is negatively related to company leverage, indicating that in possible liquidity shocks the companies opt to compensate managers with shares to reduce their exposure to systematic risks.

scholarly journals Executive Compensation And Ownership Structure

2015 ◽  
Vol 31 (2) ◽  
pp. 593 ◽  
Author(s):  
Rim Ben Hassen ◽  
Jihene El Ouakdi ◽  
Abdelwahed Omri
Keyword(s):  
Panel Data ◽  
Executive Compensation ◽  
Ownership Structure ◽  
Stock Option ◽  
Managerial Ownership ◽  
Listed Firms ◽  
Incentive Plans ◽  
The Impact ◽  
Stock Option Incentive

The objective of this paper is to highlight the impact of ownership discrepancy and type (managers, families, institutions) on executive compensation.Basedon a sample of French listed firms and using panel data regressions, the results show that capital concentration (Jensen 1986) negatively affects both the level of total executive compensation and the probability of use of stock option incentive plans. This confirms our theoretical alignment hypothesis. Moreover, the results show no evidence of the existence of a significant effect of ownership discrepancy on managerial compensation.Institutional shareholders are likely to encourage the use of stock option incentive plans and managerial ownership positively and significantly influences the level of total and fixed compensation. Family shareholding negatively affects executive compensation variables.

Characteristics of Physicians Referred for a Competence Assessment: A Comparison of State Medical Board and Hospital Referred Physicians

2010 ◽  
Vol 96 (3) ◽  
pp. 8-15 ◽  
Author(s):  
Elizabeth S. Grace ◽  
Elizabeth J. Korinek ◽  
Zung V. Tran
Keyword(s):  
Clinical Competence ◽  
Competence Assessment ◽  
Average Performance ◽  
Medical Board ◽  
Key Characteristics ◽  
Different Types ◽  
Specialty Board ◽  
And Performance ◽  
State Medical Boards ◽  
State Medical Board

ABSTRACT This study compares key characteristics and performance of physicians referred to a clinical competence assessment and education program by state medical boards (boards) and hospitals. Physicians referred by boards (400) and by hospitals (102) completed a CPEP clinical competence assessment between July 2002 and June 2010. Key characteristics, self-reported specialty, and average performance rating for each group are reported and compared. Results show that, compared with hospital-referred physicians, board-referred physicians were more likely to be male (75.5% versus 88.3%), older (average age 54.1 versus 50.3 years), and less likely to be currently specialty board certified (80.4% versus 61.8%). On a scale of 1 (best) to 4 (worst), average performance was 2.62 for board referrals and 2.36 for hospital referrals. There were no significant differences between board and hospital referrals in the percentage of physicians who graduated from U.S. and Canadian medical schools. The most common specialties referred differed for boards and hospitals. Conclusion: Characteristics of physicians referred to a clinical competence program by boards and hospitals differ in important respects. The authors consider the potential reasons for these differences and whether boards and hospitals are dealing with different subsets of physicians with different types of performance problems. Further study is warranted.

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