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Review of Quantitative Finance and Accounting

Erschienen in:

01.04.2013 | Original Research

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

verfasst von: Alok Bhargava

Erschienen in: Review of Quantitative Finance and Accounting | Ausgabe 3/2013

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Abstract

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.

Nächster Artikel The effect of target managerial ownership on the choice of acquisition financing and CEO job retention

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Titel: Executive compensation, share repurchases and investment expenditures: econometric evidence from US firms
verfasst von: Alok Bhargava
Publikationsdatum: 01.04.2013
Verlag: Springer US
Erschienen in: Review of Quantitative Finance and Accounting / Ausgabe 3/2013
Print ISSN: 0924-865X
Elektronische ISSN: 1573-7179
DOI: https://doi.org/10.1007/s11156-011-0260-1

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