Full metadata
Title
Employee stock option exercise behavior and firms' claims about employee stock option expense
Description
This dissertation analyzes the reliability of reported employee stock option (ESO) expense, the determination of expected life of ESOs, motivations to manipulate ESO expense, and the impact of noise in ESO expense on subsequent stock price returns. Based on unique data, this is the first paper to measure average historical ESO life for all employees of a broad set of firms. I find average life has a mean of 4.12 years. Average life is reduced by 0.38 years per 10 percentage point increase in volatility, and industry effects explain an additional 7% of the variation. Reported expected life increases 0.37 years per year of historical life and an additional 0.16 years per year of age of the outstanding options. Deviations of reported volatility and life from benchmarks have positive correlations with deviations from own reporting history. Using stated assumptions rather than benchmark assumptions drops (increases) ESO expense by 8.3% (17.6%) for the 25th (75th) percentile firm. The change in earnings per share decreases (increases) by $0.019 ($0.007) for the 25th (75th) percentile firm. Tests for motivations to manipulate stock option expense downward have mixed results. Absolute values of deviations from benchmarks have a positive relationship with subsequent stock price volatility suggesting noise in reported stock option expense results in stock price noise. Deviations from benchmarks and subsequent cumulative abnormal returns have statistically significant results but are difficult to interpret.
Date Created
2011
Contributors
- Young, Brian (Author)
- Coles, Jeffrey (Thesis advisor)
- Hertzel, Michael (Committee member)
- Babenko, Ilona (Committee member)
- Arizona State University (Publisher)
Topical Subject
Resource Type
Extent
vii, 61 p. : ill
Language
eng
Copyright Statement
In Copyright
Primary Member of
Peer-reviewed
No
Open Access
No
Handle
https://hdl.handle.net/2286/R.I.9188
Statement of Responsibility
by Brian Young
Description Source
Viewed on Feb. 22, 2012
Level of coding
full
Note
thesis
Partial requirement for: Ph. D., Arizona State University, 2011
bibliography
Includes bibliographical references (p. 50-51)
Field of study: Business administration
System Created
- 2011-08-12 04:39:54
System Modified
- 2021-08-30 01:53:06
- 3 years 2 months ago
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