Journal article
The Impact of Stock-Option Compensation for Outside Directors on Firm Value
The Journal of business (Chicago, Ill.), v 78(6), pp 2229-2254
01 Nov 2005
Abstract
We study firms adopting stock-option plans for outside directors in a sample of Fortune 1000 firms from 1997 to 1999. Fixed-effects models accounting for self-selectivity bias indicate that companies with such plans have higher market-to-book ratios and profitability metrics. Option plan adoptions generate positive cumulative abnormal returns (CARs) and favorable revisions in analysts' earnings forecasts. Outside director appointments produce CARs close to zero for firms with option plans but significantly negative CARs for firms without them. We conclude that such stock-option plans help align the incentives of outside directors and shareholders, thereby improving firm value. [PUBLICATION ABSTRACT]
Metrics
Details
- Title
- The Impact of Stock-Option Compensation for Outside Directors on Firm Value
- Creators
- Eliezer FichAnil Shivdasani
- Publication Details
- The Journal of business (Chicago, Ill.), v 78(6), pp 2229-2254
- Publisher
- University of Chicago, acting through its Press
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000234448100007
- Scopus ID
- 2-s2.0-32144453308
- Other Identifier
- 991019168299904721
InCites Highlights
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- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business