IDEAS home Printed from https://ideas.repec.org/a/cup/jfinqa/v39y2004i04p791-811_00.html
   My bibliography  Save this article

Executive Loans

Author

Listed:
  • Kahle, Kathleen M.
  • Shastri, Kuldeep

Abstract

This paper analyzes the characteristics and impact of loans made to executives for stock purchase, option exercise, and relocation. We find that loans made to assist executives in purchasing stock or exercising options are larger and have higher interest rates than relocation loans. All types of loans, however, are issued at below-market interest rates, on average. We also find that while stock purchase loans are given to managers with low existing ownership, option exercise loans are given to managers with high existing ownership and high cash compensation. Finally, our results indicate that executive stock ownership increases following stock purchase and option exercise loans. For managers as a whole, a loan that enables a manager to buy 100 shares of stock results in only an eight share increase in ownership. However, the relation between ownership changes and stock purchase loans is much stronger for low ownership managers.

Suggested Citation

  • Kahle, Kathleen M. & Shastri, Kuldeep, 2004. "Executive Loans," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 39(4), pages 791-811, December.
    • Handle: RePEc:cup:jfinqa:v:39:y:2004:i:04:p:791-811_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0022109000003215/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Korczak, Piotr & Liu, Xicheng, 2014. "Managerial shareholding policies and retention of vested equity incentives," Journal of Empirical Finance, Elsevier, vol. 27(C), pages 116-129.
    2. Amzaleg Yaron & Ben- Zion Uri & Rosenfeld Ahron, 2016. "Tunneling or Propping? Evidence for Related Party Transactions in Israel," International Journal of Management Sciences, Research Academy of Social Sciences, vol. 7(6), pages 332-349.
    3. Cheung, Yan-Leung & Qi, Yuehua & Raghavendra Rau, P. & Stouraitis, Aris, 2009. "Buy high, sell low: How listed firms price asset transfers in related party transactions," Journal of Banking & Finance, Elsevier, vol. 33(5), pages 914-924, May.
    4. Wang, Hongxia & Davidson III, Wallace N. & Wang, Xiaoxin, 2010. "The Sarbanes-Oxley Act and CEO tenure, turnover, and risk aversion," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(3), pages 367-376, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jfinqa:v:39:y:2004:i:04:p:791-811_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/jfq .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.