Are executive stock options associated with future earnings?

Article Abstract:

The relation between stock option grants to the top five executives is estimated and future earnings to examine whether incentive alignment or rent extraction by top managers explains option-granting behavior. To understand the source of the positive payoffs, the estimated stock option (ESO) grant values is parsed out into components predicted by economic determinants of option grants, governance quality, and a residual grant value.

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Discussion of "are executive stock options associated with future earnings?"

Article Abstract:

Hanlon, Rajgopal and Shevlin concluded that grant of stock options to executives was associated with a positive impact on future operating performance. While some results indicate that there was a positive relation between stock option grants and operating performance, alternative economic approaches produce distinctly different results.

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Why is the accrual anomaly not arbitraged away? the role of idiosyncratic risk and transaction costs

Article Abstract:

The risk and transaction costs associated with stock markets are evaluated.

Venture Analysis, Methods, Risk assessment, Stock markets, Stock market, Current value accounting

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