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Why do firms adopt CEO stock options? Evidence from the United States
[journal article]
Abstract 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 'in... view more
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.... view less
Classification
Management Science
Human Resources Management
Free Keywords
Stock options; CEO compensation; J33; M12; M52
Document language
English
Publication Year
2008
Page/Pages
p. 100-111
Journal
Journal of Economic Behavior & Organization, 68 (2008) 1
DOI
https://doi.org/10.1016/j.jebo.2007.06.008
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)