Stock Options and Firm Performance: New Evidence from the French Market

32 Pages Posted: 27 Jun 2012

See all articles by Thouraya Triki

Thouraya Triki

HEC Montreal

Loredana Ureche

University of Picardy Jules Verne - CRIISEA

Date Written: Summer 2012

Abstract

This study investigates the effect of stock option‐based compensation on the short‐term and long‐term performance of French companies. To the best of our knowledge, we provide the first empirical evidence describing the market reaction following initiations and renewals of Employee Stock Option (ESO) plans in France. We find that the French market reacts positively to initiations of ESO plans but does not consider their renewal as relevant information. Our results on the long‐term effect of ESO plans suggest that neither the size nor the value of the grants affect the firm's accounting and market performance. Similarly, corporate performance prior to the grant has no explanatory power of the size or value of the grant. This implies that, over our sample period, the relationship between option‐based compensation and corporate performance in France was inexistent, regardless of the direction considered.

Suggested Citation

Triki, Thouraya and Ureche, Loredana, Stock Options and Firm Performance: New Evidence from the French Market (Summer 2012). Journal of International Financial Management & Accounting, Vol. 23, Issue 2, pp. 154-185, 2012. Available at SSRN: https://ssrn.com/abstract=2094166 or http://dx.doi.org/10.1111/j.1467-646X.2012.01057.x

Thouraya Triki (Contact Author)

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Loredana Ureche

University of Picardy Jules Verne - CRIISEA ( email )

Pôle Universitaire Cathédrale
10 placette Lafleur BP 2716
Amiens, 80027
France

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