Are executive stock options associated with future earnings?

• 成果类型: Article
• 署名作者: Hanlon, M; Rajgopal, S; Shevlin, T
• 署名单位: University of Washington; University of Washington Seattle; University of Michigan System; University of Michigan
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2003.10.008
• 发表日期: 2003
• 关键词: MARKET VALUATION; MANAGERIAL OWNERSHIP; EQUITY GRANTS; COMPENSATION; performance; firm; POWER; RISK; determinants; DIRECTORS

摘要

We estimate the relation between stock option (ESO) grants to the top five executives and future earnings to examine whether incentive alignment or rent extraction by top managers explains option granting behavior. The future operating income associated with a dollar of Black-Scholes value of an ESO grant is $3.71. To understand the source of these positive payoffs, we parse out ESO grant values into components predicted by economic determinants of option grants, governance quality, and a residual grant value. The payoffs to ESOs appear to be driven predominantly by the economic determinants of option grants and not poor governance quality. (C) 2003 Elsevier B.V. All rights reserved.