Stock Option Grants And Cost Behavior
This study examines the relation between cost asymmetry and stock option grants. I posit that managers’ incentives to decrease the strike price of subsequent option awards may affect manager’s resource adjustment decisions. Using U.S. firm data, I find that the degree of SG&A (selling, general,...
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| Veröffentlicht in: | Journal of applied business research 2018-03, Vol.34 (2), p.265-276 |
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| container_title | Journal of applied business research |
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| creator | Kwon, Dae-Hyun |
| description | This study examines the relation between cost asymmetry and stock option grants. I posit that managers’ incentives to decrease the strike price of subsequent option awards may affect manager’s resource adjustment decisions. Using U.S. firm data, I find that the degree of SG&A (selling, general, and administrative) cost asymmetry is positively related to the value of subsequent option grants awarded to the CEOs, suggesting that managers who expect large stock-option grants deliberately delay reduction of committed costs to decrease the share price prior to the option award date. Manipulating the timing of stock option grants do not fully explain the results because the positive relation that this paper documents still holds with only fixed-date option awards sample. |
| doi_str_mv | 10.19030/jabr.v34i2.10125 |
| format | Article |
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I posit that managers’ incentives to decrease the strike price of subsequent option awards may affect manager’s resource adjustment decisions. Using U.S. firm data, I find that the degree of SG&A (selling, general, and administrative) cost asymmetry is positively related to the value of subsequent option grants awarded to the CEOs, suggesting that managers who expect large stock-option grants deliberately delay reduction of committed costs to decrease the share price prior to the option award date. Manipulating the timing of stock option grants do not fully explain the results because the positive relation that this paper documents still holds with only fixed-date option awards sample.</description><identifier>ISSN: 0892-7626</identifier><identifier>EISSN: 2157-8834</identifier><identifier>DOI: 10.19030/jabr.v34i2.10125</identifier><language>eng</language><publisher>Boynton Beach: Knowledge and Leadership Alliance</publisher><subject>Asymmetry ; Chief executive officers ; Chief executives ; Cost control ; Costs ; Equity ; Grants ; Hypotheses ; Incentives ; Labor costs ; Managers ; Market prices ; Stock options ; Stockholders</subject><ispartof>Journal of applied business research, 2018-03, Vol.34 (2), p.265-276</ispartof><rights>Copyright The Clute Institute 2018</rights><rights>Copyright The Clute Institute Mar/Apr 2018</rights><woscitedreferencessubscribed>false</woscitedreferencessubscribed></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,776,780,27901,27902</link.rule.ids></links><search><creatorcontrib>Kwon, Dae-Hyun</creatorcontrib><title>Stock Option Grants And Cost Behavior</title><title>Journal of applied business research</title><description>This study examines the relation between cost asymmetry and stock option grants. I posit that managers’ incentives to decrease the strike price of subsequent option awards may affect manager’s resource adjustment decisions. Using U.S. firm data, I find that the degree of SG&A (selling, general, and administrative) cost asymmetry is positively related to the value of subsequent option grants awarded to the CEOs, suggesting that managers who expect large stock-option grants deliberately delay reduction of committed costs to decrease the share price prior to the option award date. Manipulating the timing of stock option grants do not fully explain the results because the positive relation that this paper documents still holds with only fixed-date option awards sample.</description><subject>Asymmetry</subject><subject>Chief executive officers</subject><subject>Chief executives</subject><subject>Cost control</subject><subject>Costs</subject><subject>Equity</subject><subject>Grants</subject><subject>Hypotheses</subject><subject>Incentives</subject><subject>Labor costs</subject><subject>Managers</subject><subject>Market prices</subject><subject>Stock 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| ispartof | Journal of applied business research, 2018-03, Vol.34 (2), p.265-276 |
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| language | eng |
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| source | Alma/SFX Local Collection |
| subjects | Asymmetry Chief executive officers Chief executives Cost control Costs Equity Grants Hypotheses Incentives Labor costs Managers Market prices Stock options Stockholders |
| title | Stock Option Grants And Cost Behavior |
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