Employee stock options, EPS dilution, and stock repurchases

• 成果类型: Article
• 署名作者: Bens, DA; Nagar, V; Skinner, DJ; Wong, MHF
• 署名单位: University of Michigan System; University of Michigan; University of Chicago
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2003.10.006
• 发表日期: 2003
• 关键词: real investment implications; corporate-finance; earnings; incentives; Dividends; rewards; CHOICE; COSTS; RISK

摘要

We investigate whether corporate executives' stock repurchase decisions are affected by their incentives to manage diluted earning per share (EPS). We find that executives increase the level of their firms' stock repurchases when: (1) the dilutive effect of outstanding employee stock options (ESOs) on diluted EPS increases, and (2) earnings are below the level required to achieve the desired rate of EPS growth. We also find that executives' repurchase decisions are not associated with actual ESO exercises, suggesting that they are driven by incentives to manage diluted but not basic EPS, and strengthening our earnings management interpretation. (C) 2003 Elsevier B.V. All rights reserved.