Pukthuanthong, Kuntara and Roll, Richard and Walker, Thomas (2007) How employee stock options and executive equity ownership affect long-term IPO operating performance. Journal of Corporate Finance, 13 (5). pp. 695-720. ISSN 0929-1199. doi:10.1016/j.jcorpfin.2007.02.003. https://resolver.caltech.edu/CaltechAUTHORS:20190503-125448764
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Abstract
To ascertain whether the form of managerial compensation affects a firm's long-term operating performance, we track IPOs for 5 years after the expiration of the stabilization period. New public companies perform better when managers receive a balanced combination of stock option grants and equity ownership. Firms with unbalanced compensation arrangements, large option grants and little equity ownership or vice versa do not perform as well. This empirical finding is consistent with a theoretical explanation based on managerial risk aversion and the alignment of managerial and owner incentives.
| Item Type: | Article | ||||||
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| Additional Information: | © 2007 Elsevier B.V. Received 15 September 2005, Revised 16 February 2007, Accepted 25 February 2007, Available online 6 April 2007. We are grateful to Mark Taranto who contributed a major portion of the data, to an anonymous referee and to the editor, David J. Denis, both of whom provided many helpful comments and suggestions. | ||||||
| Subject Keywords: | Initial public offerings; Stock options; Executive compensation | ||||||
| Issue or Number: | 5 | ||||||
| Classification Code: | JEL: G12; G32; J33 | ||||||
| DOI: | 10.1016/j.jcorpfin.2007.02.003 | ||||||
| Record Number: | CaltechAUTHORS:20190503-125448764 | ||||||
| Persistent URL: | https://resolver.caltech.edu/CaltechAUTHORS:20190503-125448764 | ||||||
| Official Citation: | Kuntara Pukthuanthong, Richard Roll, Thomas Walker, How employee stock options and executive equity ownership affect long-term IPO operating performance, Journal of Corporate Finance, Volume 13, Issue 5, 2007, Pages 695-720, ISSN 0929-1199, https://doi.org/10.1016/j.jcorpfin.2007.02.003. (http://www.sciencedirect.com/science/article/pii/S0929119907000156) | ||||||
| Usage Policy: | No commercial reproduction, distribution, display or performance rights in this work are provided. | ||||||
| ID Code: | 95205 | ||||||
| Collection: | CaltechAUTHORS | ||||||
| Deposited By: | Tony Diaz | ||||||
| Deposited On: | 03 May 2019 20:06 | ||||||
| Last Modified: | 16 Nov 2021 17:11 |
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