Abstract

http://ssrn.com/abstract=847205
 
 

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Stock Options and Total Payout


Charles J. Cuny


Washington University

Gerald S. Martin


American University - Kogod School of Business

John Puthenpurackal


University of Nevada, Las Vegas - Department of Finance


Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

Abstract:     
In this paper, we examine how stock option usage affects total corporate payout. Using fixed-effects panel data estimators on various samples of Execucomp firms from 1993 to 2005, we find the higher the executive stock options, the lower the total payout, ceteris paribus. We also find some evidence that firms increase payouts through repurchases in order to offset EPS dilution that occurs due to usage of executive and non-executive stock options. However, incentives from not having dividend protection for options appear to dominate that of anti-dilution, resulting in lower total payout for firms with higher options usage.

Number of Pages in PDF File: 35

Keywords: Dividends, payout, executive compensation, incentives, stock options, share repurchases, issuances, earnings dilution

JEL Classification: G30, G32, G35, J33, M52

working papers series





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Date posted: November 14, 2005 ; Last revised: May 14, 2008

Suggested Citation

Cuny, Charles J. and Martin, Gerald S. and Puthenpurackal, John, Stock Options and Total Payout. Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: http://ssrn.com/abstract=847205 or http://dx.doi.org/10.2139/ssrn.847205

Contact Information

Charles J. Cuny
Washington University ( email )
One Brookings Drive
Saint Louis, MO 63130
United States
(314) 935 4527 (Phone)
Gerald S. Martin
American University - Kogod School of Business ( email )
Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States
202-885-3914 (Phone)
John Puthenpurackal (Contact Author)
University of Nevada, Las Vegas - Department of Finance ( email )
4505 S. Maryland Parkway
Box 456008
Las Vegas, NV 89154-6008
United States
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