Option repricing, corporate governance, and the effect of shareholder empowerment

• 成果类型: Article
• 署名作者: Gulen, Huseyin; O'Brien, William J.
• 署名单位: Purdue University System; Purdue University; University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.05.004
• 发表日期: 2017
• 页码: 389-415
• 关键词: Shareholder empowerment; Executive compensation; Corporate finance; corporate governance; Corporate regulation

摘要

We use the practice of employee option repricing to investigate how shareholder involvement in firm compensation policies affects the quality of firm governance. We find that a 2003 reform that empowered shareholders to approve or reject repricing proposals led to value increases in previous repricers. The likelihood of repricing becomes less sensitive to poor manager performance, but remains similarly sensitive to bad luck, after the reform. Average post-repricing changes in firm performance are positive only after the reform. Overall, our results suggest that shareholder empowerment improves the governance of repricing and can transform repricing into a value-creating tool. (C) 2017 Elsevier B.V. All rights reserved.