Executive compensation, share repurchases and investment expenditures: econometric evidence from US firms

Executive compensation, share repurchases and investment expenditures: econometric evidence from... This paper modeled the dynamic inter-relationships between average salary, bonus, and stock options granted to top executives of 700 US firms using a merged ExecuComp and Compustat database. The effects of stock options granted and exercised on firms’ share repurchases and research and development and investment expenditures were investigated, taking into account simultaneity and distributional misspecification aspects. First, firms’ total assets, intangible assets, market-to-book value, and share repurchases were positively associated with the values of stock options granted. Second, stock options exercised in the previous year were significant predictors of share repurchases indicating that firms avoided dilution of earnings per share. Third, share repurchases and stock options granted were negatively associated with expenditures on research and development and long-term investments. Overall, the results suggest that high levels of stock options granted to executives and share repurchases are unlikely to have beneficial effects for raising future productivity. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Executive compensation, share repurchases and investment expenditures: econometric evidence from US firms

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Springer US
Copyright © 2011 by Springer Science+Business Media, LLC
Economics / Management Science; Finance/Investment/Banking; Accounting/Auditing; Econometrics; Operations Research/Decision Theory
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    Bens, D; Nagar, V; Wong, M
  • Managerial motivation and timing of open market share repurchases
    Bozanic, Z
  • Executive compensation and firm performance: adjustment dynamics, non-linearity and asymmetry
    Canarella, G; Nourayi, M
  • Is R&D always beneficial?
    Chang, HL
  • The use of equity grants to manage optimal equity incentive levels
    Core, J; Guay, W

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