Journal article
Executive stock options and IPO underpricing
Journal of financial economics, v 85(1), pp 39-65
01 Jul 2007
Abstract
In about one-third of US IPOs between 1996 and 2000, executives received stock options with an exercise price equal to the IPO offer price rather than a market-determined price. Among firms with such “IPO options”, 58% of top executives realize a net benefit from underpricing: the gain from the options exceeds the loss from the dilution of their pre-IPO shareholdings. If executives can influence either the IPO offer price or the timing and terms of their stock option grants, there should be a positive relation between IPO option grants and underpricing. We find no evidence of such a relation. Our results contrast sharply with the emerging literature on managerial self-dealing at shareholder expense.
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Details
- Title
- Executive stock options and IPO underpricing
- Creators
- Michelle Lowry - Pennsylvania State UniversityKevin J. Murphy - University of Southern California
- Publication Details
- Journal of financial economics, v 85(1), pp 39-65
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000247807700002
- Scopus ID
- 2-s2.0-34249911495
- Other Identifier
- 991021881500604721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business, Finance
- Economics