The Role of Executive Stock Options in REIT Repurchases

25 Pages Posted: 7 Jul 2006

See all articles by Chinmoy Ghosh

Chinmoy Ghosh

University of Connecticut - Department of Finance

John P. Harding

University of Connecticut - School of Business - Center for Real Estate and Urban Economic Studies

Özcan Sezer

University of Toledo

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law

Multiple version iconThere are 2 versions of this paper

Date Written: June 7, 2006

Abstract

In this paper, we examine the relationship between managerial stock option holdings and the decision to announce a repurchase of the firm's common stock. Managerial stock option holdings should reinforce the traditional undervaluation, free cash flow and capital structure motives for repurchases. We use data from the REIT industry during the peak period of repurchase activity (1997-1999) to estimate a logit model of the decision to repurchase. After controlling for the standard motivations discussed in the literature, we find evidence that managerial option holdings are positively related to the likelihood of a repurchase announcement. Our results also support the contention that REITs use repurchase announcements to signal undervaluation.

Keywords: REITs, Stock Repurchases, Executive Stock Options

JEL Classification: J33, G34, G32, G35, G14

Suggested Citation

Ghosh, Chinmoy and Harding, John P. and Sezer, Özcan and Sirmans, C. F., The Role of Executive Stock Options in REIT Repurchases (June 7, 2006). Available at SSRN: https://ssrn.com/abstract=912532 or http://dx.doi.org/10.2139/ssrn.912532

Chinmoy Ghosh

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-486-3040 (Phone)
860-486-0349 (Fax)

John P. Harding

University of Connecticut - School of Business - Center for Real Estate and Urban Economic Studies ( email )

2100 Hillside Road
Unit 1041RE
Storrs, CT 06269-2041
United States
860-486-3227 (Phone)
860-486-0349 (Fax)

Özcan Sezer (Contact Author)

University of Toledo ( email )

Mail Stop 119, HH 3000
Toledo, OH 43606

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law ( email )

Tallahasse, FL 32306
United States
850 644-4076 (Phone)

HOME PAGE: http://www.cob.fsu.edu/rmi

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