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Determinants of Voluntary Executive Stock Option Disclosure in Brazil

45 Pages Posted: 14 Dec 2010 Last revised: 20 Jun 2011

Eduardo Schiehll

HEC Montréal

Paulo R. S. Terra

Universidade Federal do Rio Grande do Sul (UFRGS)

Fernanda Gomes Victor

Universidade Federal do Rio Grande do Sul (UFRGS)

Date Written: April 26, 2011

Abstract

This study investigates whether the governance attributes of Brazilian companies are associated with voluntary executive stock option (ESO) disclosure. Results show that Brazilian companies voluntarily disclose very little about their ESO plans, and that board size, presence of a compensation committee, and auditing by a Big 4 firm are significantly related to the degree of voluntary ESO disclosure. We also show that family-controlled companies in Brazil are associated with low voluntary ESO disclosure. Results are robust to a number of specification tests, dependent and explanatory variable measurements, and sample composition. This study has professional and regulatory implications for Brazil and other emerging capital markets. The results underscore the need for stricter rules for executive compensation reporting in Brazil, and they invite policy makers and regulators in emerging markets to consider the effects of company-level governance factors on disclosure incentives.

Keywords: Executive Compensation, Stock Options, Voluntary Disclosure, Emerging Markets, Brazil

JEL Classification: G34, M41, F39

Suggested Citation

Schiehll, Eduardo and Terra, Paulo R. S. and Victor, Fernanda Gomes, Determinants of Voluntary Executive Stock Option Disclosure in Brazil (April 26, 2011). Available at SSRN: https://ssrn.com/abstract=1724895 or http://dx.doi.org/10.2139/ssrn.1724895

Eduardo Schiehll (Contact Author)

HEC Montréal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada
514-340-6516 (Phone)
514-340-5633 (Fax)

Paulo Renato Soares Terra

Universidade Federal do Rio Grande do Sul (UFRGS) ( email )

Rua Washington Luís, 855 - Sala 321
Porto Alegre RS, RS 90010-460
Brazil
+55-51-3308-3536 (Phone)
+55-51-3308-3991 (Fax)

HOME PAGE: http://www.ea.ufrgs.br/

Fernanda Gomes Victor

Universidade Federal do Rio Grande do Sul (UFRGS) ( email )

Av. Carlos Gomes 1111
Porto Alegre, Rio Grande do Sul 90480-004
Brazil

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