Unintended Consequences: Information Releases and CEO Stock Option Grants

Quigley, Timothy J.; Hubbard, Timothy David; Ward, Ashley J. W.; Graffin, Scott D.

doi:10.5465/amj.2017.0455

Cited by 31 publications

(26 citation statements)

References 62 publications

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“…Finally, research on discretion has also continued to receive a great deal of attention as a means of understanding variance in UET findings (e.g., Campbell, Campbell, Sirmon, Bierman, & Tuggle, 2012; Crossland & Chen, 2013; Graffin, Carpenter, & Boivie, 2011; Quigley, Hubbard, Ward, & Graffin, 2020). Notably, Hambrick and Quigley (2014) examined the effect of CEOs on firm performance in subsamples of low- (e.g., steel production), medium - (e.g., hotels), and high - (e.g., computers) discretion industries.…”

Section: Evaluating Progress Made On Uet Metacritiquesmentioning

confidence: 99%

Metacritiques of Upper Echelons Theory: Verdicts and Recommendations for Future Research

Neely

Lovelace²,

Cowen

et al. 2020

Journal of Management

200

174

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After more than 35 years, Hambrick and Mason’s upper echelons theory (UET) stands as one of the most influential perspectives in management research. However, as the literature and its attendant reviews have become more numerous and specialized, discussion of the fundamental conceptual and methodological critiques leveled against research utilizing the UET perspective has grown fragmented. As such, the first aim of the present review is to identify and synthesize a set of common critiques levied against UET research. In doing so, we unpack important nuance within each critique while establishing a common vocabulary to facilitate greater consistency in how these critiques are discussed by scholars, editors, and reviewers. Next, we analyze the past decade of UET research (i.e., empirical and conceptual articles) to provide a progress report on the state of the literature as it pertains to each critique. Based on this analysis, we issue a “verdict,” providing clear guidance on what issues still need to be resolved and offering clear recommendations for UET scholars moving forward. Finally, we close by taking stock of how our recommendations position UET scholars to embrace the task of providing impactful insights on emerging challenges facing top executives.

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Section: Evaluating Progress Made On Uet Metacritiquesmentioning

confidence: 99%

Metacritiques of Upper Echelons Theory: Verdicts and Recommendations for Future Research

Neely

Lovelace²,

Cowen

et al. 2020

Journal of Management

200

174

View full text Add to dashboard Cite

show abstract

“…Appendix B summarizes prior literature on the tone of speech. Among the types of corporate narratives evidenced in the studies, we find the integrated reports (Beretta et al 2019;Roman et al 2019), the CEO letter (Quigley et al 2020;Boudt and Thewissen 2019;Craig and Amernic 2018), the president's statement (Moreno et al 2019), press releases (media) (Luo et al 2019), social responsibility reports (Clarkson et al 2020;Martínez-Ferrero et al 2019;Hummel et al 2017), among others.…”

Section: The Tone Of the Speechmentioning

confidence: 91%

“…When it is expressed in letters to shareholders in a positive tone, in times of economic crisis, in addition to transmitting a positive expectation of internal actions in terms of future performance, it can also positively reflect the characteristics of top managers in the search for new opportunities in the midst of the crisis (Pengnate et al 2020). In addition to this analysis of CEOs' incentives in times of crisis, Quigley et al (2020) address the informational advantage of CEOs, driven by information asymmetry, in using strategies created in periods prior to granting an option to guarantee their own benefits. The authors note that mandatory communications regulated by the SEC are of greater relevance than information provided voluntarily.…”

Section: The Tone Of the Speechmentioning

confidence: 99%

The Relationship between the Company’s Value and the Tone of the Risk-Related Narratives: The Case of Portugal

2021

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The present study aims to identify the impact of the tone of risk reporting narratives on company market value. The paper uses a sample of 34 Portuguese non-finance companies with shares traded at the Euronext Lisbon stock exchange market. The paper conducts an automated content analysis of the risk reporting narratives included in the risk and risk management sections of the annual reports for 2018 by using the software DICTION 7 (Digitext, Inc., Austin, TX, USA) to retrieve the speech tone. Main findings indicate that the tone category “activity” is associated negatively with the company’s market value. This result shows that investors misprice risk information that incorporates traces of overconfidence, narcissistic self-confidence and heroic leadership. The present study extends prior literature by analyzing the economic incentives of the tone of risk reporting narratives, not yet studied. Findings are both relevant to investors to support their decision-making processes and managers to strategically manage their risk communication tactics and benefit from the advantages emanated from them. Limitations related to the research setting do not undermine the generalization of findings because the automated algorithm provided by DICTION assures the content analysis’s reliability. The sample used corresponds to the population of the Portuguese non-finance listed companies.

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“…Indeed, the receiver's perception of clarity depends on the level of disclosure completeness. Moreover, the perception of correctness increases if the receiver presumes that the information is free of error and fraud (Cohen et al, 2011;Quigley et al, 2020). Therefore, it is suggested that by improving the disclosed information's relevance, completeness and correctness, the firm's information transparency increases.…”

Section: Firm Information Transparencymentioning

confidence: 99%

“…For that reason, firms listed on a stock exchange are expected to provide valid information to assist investors in making informed investment decisions (IDs). Furthermore, as firms generally look for ways to reduce their cost of capital while investors seek ways to maximize their returns, the ensuing conflict of interest tends to lead to information asymmetry, whereby one party in a transaction has more information than the other (Quigley et al, 2020). The information asymmetry that prevails in investor-firm relationships (Chae, 2005) typically steers investors' skepticism and lack of trust, hindering them from making rough IDs (Chae, 2005;Lee et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

The transformative role of firm information transparency in triggering retail investor's perceived financial well-being

Naveed

Farah

Hasni

2021

IJBM

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PurposeBased on transformative service research (TSR), the study explores the mechanisms by which a firm's information transparency influences a retail investor's perceived financial well-being (PFW). It proposes a model exploring the mediating roles of the investor's financial risk tolerance (RT) and financial self-efficacy (FSE) in the relationship between a firm's information transparency and the consumer's PFW.Design/methodology/approachA survey was conducted by including a sample of 310 retail investors from Pakistan Stock Exchange (PSX) to test the proposed hypotheses. Data analysis was based on a series of multiple regressions, moderation and serial mediation analyses.FindingsThe findings show that a firm's information transparency harnesses investors' PFW. Information transparency also positively affects investors' RT toward the firm and their FSE while dealing with financial challenges.Research limitations/implicationsThe findings call for a deeper understanding of financial services' interventions and their underlying mechanisms to improve consumer’s financial well-being (FWB). On a methodology level, future studies could apply a mixed-method approach and SEM to explore new avenues for predicting investors' FWB.Practical implicationsBesides validating TSR, the study has several implications for listed firms to adopt more transparent information reporting practices to improve investors' PFW. Accordingly, regulators should take initiatives to compel firms to comply with higher standards of information transparency.Originality/valueThe proposed model explores a concrete mechanism that helps listed firms to strengthen investors' PFW via information transparency.

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Unintended Consequences: Information Releases and CEO Stock Option Grants

Cited by 31 publications

References 62 publications

Metacritiques of Upper Echelons Theory: Verdicts and Recommendations for Future Research

Metacritiques of Upper Echelons Theory: Verdicts and Recommendations for Future Research

The Relationship between the Company’s Value and the Tone of the Risk-Related Narratives: The Case of Portugal

The transformative role of firm information transparency in triggering retail investor's perceived financial well-being

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