Investor Sentiment and Stock Option Vesting Terms

• 成果类型: Article
• 署名作者: Huang, Shawn X.; Keskek, Sami; Sanchez, Juan Manuel
• 署名单位: Arizona State University; Arizona State University-Tempe; State University System of Florida; Florida State University; University of Texas System; University of Texas at San Antonio
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3845
• 发表日期: 2022
• 页码: 773-795
• 关键词: Investor sentiment; Executive compensation; vesting schedules; vesting terms; Stock options

摘要

Using the details of vesting terms, we document that stock options granted in high-investor-sentiment periods tend to have shorter vesting periods and durations and are more likely to vest completely or have a significantly larger fraction vested within one year of the grant date, relative to low-sentiment periods. We further find that the sentiment effect on vesting terms is more pronounced when firms are largely held by investors with short investment horizons (e.g., transient institutions). Moreover, short vesting terms in high-sentiment periods are positively associated with future mergers-andacquisitions activity and capital expenditures. Overall, our findings are consistent with theoretical predictions that, in a speculative market, shareholders incentivize managers with short-term-oriented compensation contracts to induce managers to pursue actions maintaining overvaluation.