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How employee stock options and executive equity ownership affect long-term IPO operating performance

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
Related URLs:
URLURL TypeDescription
https://doi.org/10.1016/j.jcorpfin.2007.02.003DOIArticle
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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