Abstract

http://ssrn.com/abstract=629822
 
 

References (45)



 
 

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Doom or Gloom? CEO Stock Options After Enron


Suman Banerjee


College of Business, University of Wyoming

Thomas H. Noe


University of Oxford - Said Business School; University of Oxford - Balliol College; European Corporate Governance Institute

Vladimir A. Gatchev


University of Central Florida - Department of Finance

February 1, 2008

AFA 2006 Boston Meetings Paper
EFA 2008 Athens Meetings Paper

Abstract:     
This study finds a significant and pervasive decline but not an elimination of CEO optionbased compensation after the corporate governance scandals around 2000-2001 centered on executive option compensation. Some, but not all, of the drop is predicted by changes in the characteristics of firms, CEOs, boards of directors, and markets. In the cross-section, the change in CEO options is positively related to firm size, growth opportunities, ownership by large pension funds, and CEO experience and negatively related to firm age, board size, and "fair" value expensing of options. The findings provide significant support for the hypothesis that CEO options are affected by optimal contracting considerations, the hypothesis that CEO power is a significant determinant of CEO options, and, to some extent, the hypothesis that differences in perceived and actual costs of CEO options are important. Overall, however, the optimal contracting hypothesis is most able to explain the cross-sectional variation in the decline in options after the scandals.

Number of Pages in PDF File: 45

Keywords: Executive stock options, Executive compensation, Corporate governance

JEL Classification: G14, G32, J33, M52

working papers series





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Date posted: December 7, 2004  

Suggested Citation

Banerjee, Suman and Noe, Thomas H. and Gatchev, Vladimir A., Doom or Gloom? CEO Stock Options After Enron (February 1, 2008). AFA 2006 Boston Meetings Paper; EFA 2008 Athens Meetings Paper. Available at SSRN: http://ssrn.com/abstract=629822 or http://dx.doi.org/10.2139/ssrn.629822

Contact Information

Suman Banerjee
College of Business, University of Wyoming ( email )
P.O. Box 3985
Laramie, WY 82071-3985
United States
307-766-2155 (Phone)
Thomas H. Noe (Contact Author)
University of Oxford - Said Business School ( email )
Park End Street
Oxford, OX1 3BJ
United Kingdom
University of Oxford - Balliol College ( email )
Broad St
Oxford, OX1 3BJ
United Kingdom
European Corporate Governance Institute ( email )
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Vladimir A. Gatchev
University of Central Florida - Department of Finance ( email )
Orlando, FL 32816-1400
United States
(407) 823-3694 (Phone)
(407) 823-6676 (Fax)
HOME PAGE: http://www.bus.ucf.edu/vgatchev/
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