Stock Option Measures and the Stock Repurchase Decision

Stock Option Measures and the Stock Repurchase Decision The major purposes of this study are two fold. First, we investigate whether or not the dilutive effect from stock options on the denominator of earnings per share is associated with the incurrence of stock repurchases. We use the FASB dilution and the economic dilution as the direct dilution measures and examine their relationship with stock repurchase decision. Second, we explore which of the extant measures of stock options can better explain the incurrence of stock repurchases. Six extant measures of stock options from previous studies are used: (1) the FASB's treasury-stock EPS dilution method, (2) the economic dilution measure based on Core, Guay and Kothari (2002), (3) the number of employee stock option exercises, (4) the number of stock option grants, (5) the number of total stock options outstanding, and (6) the number of exercisable stock options. Review of Quantitative Finance and Accounting Springer Journals

Stock Option Measures and the Stock Repurchase Decision

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Kluwer Academic Publishers
Copyright © 2004 by Kluwer Academic Publishers
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
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