Abstract

http://ssrn.com/abstract=1461713
 
 

Citations (16)



 


 



The Impact of Shareholder Activism on Financial Reporting and Compensation: The Case of Employee Stock Options Expensing


Fabrizio Ferri


Columbia Business School - Accounting, Business Law & Taxation

Tatiana Sandino


Harvard Business School - Accounting and Control

August 25, 2009

Accounting Review, March 2009

Abstract:     
We examine the economic consequences of more than 150 shareholder proposals to expense employee stock options (ESO) submitted during the proxy seasons of 2003 and 2004, the first case in which the SEC allowed a shareholder vote on an accounting matter. Our results indicate that these proposals affected accounting and compensation choices. Specifically, (i) targeted firms were more likely to adopt ESO expensing relative to a control sample of S&P 500 firms, (ii) among targeted firms, the likelihood of adoption increased in the degree of voting support for the proposal, and (iii) non-targeted firms were more likely to adopt ESO expensing when a peer firm was targeted. Additionally, (i) CEO pay decreased in firms in which the proposal was approved relative to a control sample of S&P 500 firms, and (ii) among targeted firms, approval of the proposal was associated with decreases in CEO compensation and the use of ESO in CEO pay. Our findings reveal an increasing influence of shareholder proposals on governance practices.

Number of Pages in PDF File: 48

Keywords: Shareholder Activism, Shareholder votes, Executive Compensation, Stock Option Expensing, Corporate Governance, Financial Reporting

JEL Classification: G24, M44

Accepted Paper Series


Download This Paper

Date posted: August 26, 2009  

Suggested Citation

Ferri, Fabrizio and Sandino, Tatiana, The Impact of Shareholder Activism on Financial Reporting and Compensation: The Case of Employee Stock Options Expensing (August 25, 2009). Accounting Review, March 2009. Available at SSRN: http://ssrn.com/abstract=1461713

Contact Information

Fabrizio Ferri
Columbia Business School - Accounting, Business Law & Taxation ( email )
3022 Broadway
New York, NY 10027
United States

Tatiana Sandino (Contact Author)
Harvard Business School - Accounting and Control ( email )
367 Morgan Hall
Soldiers Field
Boston, MA 02163
United States
617-495-0625 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 1,807
Downloads: 403
Download Rank: 38,295
Citations:  16

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.735 seconds