The use of equity grants to manage optimal equity incentive levels

• 成果类型: Article
• 署名作者: Core, J; Guay, W
• 署名单位: University of Pennsylvania
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/S0165-4101(99)00019-1
• 发表日期: 1999
• 关键词: investment opportunity set; employee stock-options; free cash flow; executive-compensation; empirical-analysis; performance pay; AGENCY COSTS; OWNERSHIP; CONTRACTS; BEHAVIOR

摘要

We predict and find that firms use annual grants of options and restricted stock to CEOs to manage the optimal level of equity incentives. We model optimal equity incentive levels for CEOs, and use the residuals from this model to measure deviations between CEOs' holdings of equity incentives and optimal levels. We find that grants of new incentives from options and restricted stock are negatively related to these deviations. Overall, our evidence suggests that firms set optimal equity incentive levels and grant new equity incentives in a manner that is consistent with economic theory. (C) 1999 Elsevier Science B.V. All rights reserved.