Discussion of 'Employee Stock Options, Eps Dilution, and Stock Repurchases'

Posted: 16 Dec 2003

See all articles by David F. Larcker

David F. Larcker

Stanford University - Graduate School of Business

Abstract

Bens, Nagar, Skinner and Wong conclude that stock repurchase decisions are related to the impact of stock options on the ability of firms to meet historical EPS growth targets. Although this is a provocative conclusion, this interpretation is questionable because managers are assumed to be extremely myopic, the results are highly sensitive to the choice of EPS growth target, firms with a high P/E ratio produce results that are completely inconsistent with the research hypothesis, and alternative explanations that are unrelated to earnings management are not considered.

Keywords: stock options, stock repurchase decisions

JEL Classification: J33, M41, M43, G35

Suggested Citation

Larcker, David F., Discussion of 'Employee Stock Options, Eps Dilution, and Stock Repurchases'. Journal of Accounting & Economics, Vol. 36, Nos. 1-3, pp. 45-49, December 2003. Available at SSRN: https://ssrn.com/abstract=480402

David F. Larcker (Contact Author)

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

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