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Employee Stock Option Exercise Behav...

Arizona State University.

Employee Stock Option Exercise Behavior and Firms' Claims about Employee Stock Option Expense.

Record Type:	Electronic resources : Monograph/item
Title/Author:	Employee Stock Option Exercise Behavior and Firms' Claims about Employee Stock Option Expense.
Author:	Young, Brian.
Description:	69 p.
Notes:	Source: Dissertation Abstracts International, Volume: 72-07, Section: A, page: .
Notes:	Adviser: Jeffrey Coles.
Contained By:	Dissertation Abstracts International72-07A.
Subject:	Business Administration, Management.
Online resource:	http://pqdd.sinica.edu.tw/twdaoapp/servlet/advanced?query=3453523
ISBN:	9781124616247

Employee Stock Option Exercise Behavior and Firms' Claims about Employee Stock Option Expense.
Young, Brian.

Employee Stock Option Exercise Behavior and Firms' Claims about Employee Stock Option Expense. - 69 p.

Source: Dissertation Abstracts International, Volume: 72-07, Section: A, page: .

Thesis (Ph.D.)--Arizona State University, 2011.

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. In contrast to the general findings of the extant literature, I do not find a direct relationship between incentives to manipulate earnings and deviations from benchmark values. Nevertheless, deviations for both life and volatility are slightly correlated thus demonstrating subtle manipulation or irrational expectations. 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.

ISBN: 9781124616247Subjects--Topical Terms:

212493
Business Administration, Management.

Employee Stock Option Exercise Behavior and Firms' Claims about Employee Stock Option Expense.
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245 1 0 $a Employee Stock Option Exercise Behavior and Firms' Claims about Employee Stock Option Expense.
300 $a 69 p.
500 $a Source: Dissertation Abstracts International, Volume: 72-07, Section: A, page: .
500 $a Adviser: Jeffrey Coles.
502 $a Thesis (Ph.D.)--Arizona State University, 2011.
520 $a 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. In contrast to the general findings of the extant literature, I do not find a direct relationship between incentives to manipulate earnings and deviations from benchmark values. Nevertheless, deviations for both life and volatility are slightly correlated thus demonstrating subtle manipulation or irrational expectations. 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.
590 $a School code: 0010.
650 4 $a Business Administration, Management. $3 212493
650 4 $a Economics, Finance. $3 212585
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710 2 $a Arizona State University. $b Business Administration. $3 531026
773 0 $t Dissertation Abstracts International $g 72-07A.
790 1 0 $a Coles, Jeffrey, $e advisor
790 1 0 $a Hertzel, Michael $e committee member
790 1 0 $a Babenko, Ilona $e committee member
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