The implications of executives' stock option bailout on future compensation contracts / Mark Edward Vargus.

Format:

Book

Manuscript

Microformat

Thesis/Dissertation

Author/Creator:

Vargus, Mark Edward.

Contributor:

University of Pennsylvania.

Language:

English

Subjects (All):

Penn dissertations--Accounting.

Accounting--Penn dissertations.

Penn dissertations--Managerial science and applied economics.

Managerial science and applied economics--Penn dissertations.

Local Subjects:

Penn dissertations--Accounting.

Accounting--Penn dissertations.

Penn dissertations--Managerial science and applied economics.

Managerial science and applied economics--Penn dissertations.

Physical Description:

vi, 96 pages ; 29 cm

Production:

1996.

Summary:

This paper analyzes option exercise data for 232 senior level executives from 40 firms over the period 1970 to 1990. Executives' decisions to bail out of options, i.e. early exercise and sale of stock, are examined. Consistent with diversification hypotheses, the decision to reduce their equity exposure through bailout is positively related to the amount of option gains, and negatively related to their level of stockholdings (a substitute to bailout). The impact of risk on bailout is complicated by the fact that higher risk (return variance) is associated with higher option values. Residual risk is negatively related to bailout indicating executives forgo diversification in order to keep the more valuable options alive. Future adverse stock performance is also found to be a determinant of bailout. Differences across various executive positions (e.g. CEO, CFO, VP) are also examined.

Notes:

Thesis (Ph.D. in Accounting) -- University of Pennsylvania, 1996.

Includes bibliographical references.

Local Notes:

University Microfilms order no.: 97-13021.

OCLC:

187469493