The effect of executive stock option delta ...
Document type :
Compte-rendu et recension critique d'ouvrage
Title :
The effect of executive stock option delta and vega on the spin-off decision
Author(s) :
Journal title :
Quarterly Review of Economics and Finance
Publisher :
Elsevier
Publication date :
2018-11-08
ISSN :
1062-9769
English keyword(s) :
Spin-off
Divestiture
Stock option delta
Stock option vega
Executive compensation
Firm risk
Firm value
Divestiture
Stock option delta
Stock option vega
Executive compensation
Firm risk
Firm value
HAL domain(s) :
Sciences de l'Homme et Société/Gestion et management
English abstract : [en]
We investigate the role of CEO incentives around asset restructuring known as corporate spin-off. More specifically, we focus on executive stock option delta and vega vis-à-vis changes in firm value and firm riskiness in ...
Show more >We investigate the role of CEO incentives around asset restructuring known as corporate spin-off. More specifically, we focus on executive stock option delta and vega vis-à-vis changes in firm value and firm riskiness in response to the corporate spin-off. Controlling for self-selection of the spin-off decision, we find that executive stock option vega is positively related to changes in firm value as well as changes in firm risk. Conversely, we find that executive stock option delta is negatively related to changes in firm value and firm risk. Finally, we estimate the Fazzari et al. (1988) investment model and show that at the business segment level, CEO incentives are positively linked to capital spending. Overall, our study extends the current literature by documenting the role of executive stock option delta and vega in the context of corporate spin-offs.Show less >
Show more >We investigate the role of CEO incentives around asset restructuring known as corporate spin-off. More specifically, we focus on executive stock option delta and vega vis-à-vis changes in firm value and firm riskiness in response to the corporate spin-off. Controlling for self-selection of the spin-off decision, we find that executive stock option vega is positively related to changes in firm value as well as changes in firm risk. Conversely, we find that executive stock option delta is negatively related to changes in firm value and firm risk. Finally, we estimate the Fazzari et al. (1988) investment model and show that at the business segment level, CEO incentives are positively linked to capital spending. Overall, our study extends the current literature by documenting the role of executive stock option delta and vega in the context of corporate spin-offs.Show less >
Language :
Anglais
Popular science :
Non
Collections :
Source :