CEO stock option awards and the timing of corporate voluntary disclosures

CEO stock option awards and the timing of corporate voluntary disclosures We investigate whether CEOs manage the timing of their voluntary disclosures around stock option awards. We conjecture that CEOs manage investors’ expectations around award dates by delaying good news and rushing forward bad news. For a sample of 2,039 CEO option awards by 572 firms with fixed award schedules, we document changes in share prices and analyst earnings forecasts around option awards that are consistent with our conjecture. We also provide more direct evidence based on management earnings forecasts issued prior to award dates. Our findings suggest that CEOs make opportunistic voluntary disclosure decisions that maximize their stock option compensation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting and Economics Elsevier

CEO stock option awards and the timing of corporate voluntary disclosures

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Publisher
Elsevier
Copyright
Copyright © 2000 Elsevier Science B.V.
ISSN
0165-4101
D.O.I.
10.1016/S0165-4101(00)00014-8
Publisher site
See Article on Publisher Site

Abstract

We investigate whether CEOs manage the timing of their voluntary disclosures around stock option awards. We conjecture that CEOs manage investors’ expectations around award dates by delaying good news and rushing forward bad news. For a sample of 2,039 CEO option awards by 572 firms with fixed award schedules, we document changes in share prices and analyst earnings forecasts around option awards that are consistent with our conjecture. We also provide more direct evidence based on management earnings forecasts issued prior to award dates. Our findings suggest that CEOs make opportunistic voluntary disclosure decisions that maximize their stock option compensation.

Journal

Journal of Accounting and EconomicsElsevier

Published: Feb 1, 2000

References

  • Market valuation of employee stock options
    Aboody, D.
  • The effect of executive stock option plans on stockholders and bondholders
    DeFusco, R.A.; Johnson, R.R.; Zorn, T.S.
  • Voluntary disclosures and insider transactions
    Noe, C.F.
  • Earnings disclosures and stockholders lawsuits
    Skinner, D.J.
  • Do corporations award CEO stock options effectively?
    Yermack, D.

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