CEO Stock‐Based Compensation: An Empirical Analysis of Incentive‐Intensity, Relative Mix, and Economic Determinants

Bryan, Stephen; Hwang, Lee‐Seok; Lilien, Steven B.

doi:10.1086/209658

Cited by 344 publications

(70 citation statements)

References 42 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…In the fairly regulated US utilities sector, firms are found to have a significantly lower likelihood to adopt CEO stock options. This is consistent with Jensen and Murphy's (1990) argument that political and regulatory pressures impede the efficient design of CEO compensation and with previous evidence on the negative effect of utility firms on the level of CEO stock option compensation (Yermack 1995, Bryan et al 2000. From another viewpoint, utilities firms are found to trail behind in the adoption of CEO stock options compared to firms in other industries because they operate in a rather certain environment characterized by little R&D investment and local monopoly markets.…”

Section: Analysis Of Resultssupporting

confidence: 90%

Why do firms adopt CEO stock options? Evidence from the United States

Tzioumis

2008

Journal of Economic Behavior & Organization

View full text Add to dashboard Cite

This paper examines the determinants of stock option introduction as a part of CEO compensation in listed US firms during the 1994-2004 period. The results are consistent with agency costs and recruiting considerations, suggesting that firms do not adjust CEO compensation in order to address the 'investment horizon' problem. The findings also suggest that CEO stock option adoption is not necessarily influenced by the same factors that have been found in the literature to affect the level of CEO stock-option compensation and the adoption of broad-based stock-option incentives. Overall, the findings provide evidence for several theoretical predictions, thus adding to our understanding of managerial incentives.JEL Classification: J33, M12, M52

show abstract

Section: Analysis Of Resultssupporting

confidence: 90%

Why do firms adopt CEO stock options? Evidence from the United States

Tzioumis

2008

Journal of Economic Behavior & Organization

View full text Add to dashboard Cite

show abstract

“…Also Bryan et al (2000) provide evidence that granting behavior is consistent with agency-based predictions. It is left to future research to sort out these opposing positions.…”

Section: Trends In the Use Of Accounting Numbers For Contracting Withmentioning

confidence: 56%

Financial Accounting Information and Corporate Governance

2002

View full text Add to dashboard Cite

This paper reviews and proposes additional research concerning the role of publicly reported financial accounting information in the governance processes of corporations. We first discuss research on the use of financial accounting in managerial incentive plans and explore future research directions. We then propose that governance research be extended to explore more comprehensively the use of financial accounting information in additional corporate control mechanisms, and suggest opportunities for expanding such research. We also propose cross-country research to investigate more directly the effects of financial accounting information on economic performance through its role in governance and more generally. r 2001 Elsevier Science B.V. All rights reserved.

show abstract

“…Hemmer, Kim, and Verrecchia (1999), and Hirshleifer and Suh (1992) show that options help mitigate the effects of executive risk aversion by giving managers incentives to adopt rather than avoid risky projects. Smith and Watts (1992), Gaver and Gaver (1993), and Bryan, Hwang, and Lilien (2000) find that firms with greater investment opportunities use options more frequently as a part of the CEO's compensation package and Guay (1999) shows that ESO risk incentives are positively related to firms' investment opportunity sets. The intuition is that risk-related agency problems that cause managers to pass up risky, positive NPV projects are likely to be the most severe in firms with substantial investment opportunities.…”

Section: Hypotheses Development and Conceptual Empirical Modelmentioning

confidence: 99%

Empirical Evidence on the Relation Between Stock Option Compensation and Risk Taking

Rajgopal¹,

Shevlin

1999

SSRN Journal

141

View full text Add to dashboard Cite

We examine whether executive stock options (ESOs) provide managers with incentives to invest in risky projects. For a sample of oil and gas producers, we examine whether the coefficient of variation of future cash flows from exploration activity (our proxy for exploration risk) increases with the sensitivity of the value of the CEO's options to stock return volatility (ESO risk incentives). Both ESO risk incentives and exploration risk are treated as endogenous variables by adopting a simultaneous equations approach.We find evidence that ESO risk incentives has a positive relation with future exploration risk taking. Additional tests indicate that ESO risk incentives exhibit a negative relation with oil price hedging in a system of equations where ESO risk incentives and hedging are allowed to be endogenously determined. Overall, our results are consistent with ESOs providing managers with incentives to mitigate risk-related incentive problems.

show abstract

CEO Stock‐Based Compensation: An Empirical Analysis of Incentive‐Intensity, Relative Mix, and Economic Determinants

Cited by 344 publications

References 42 publications

Why do firms adopt CEO stock options? Evidence from the United States

Why do firms adopt CEO stock options? Evidence from the United States

Financial Accounting Information and Corporate Governance

Empirical Evidence on the Relation Between Stock Option Compensation and Risk Taking

Contact Info

Product

Resources

About