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Discussion of “Explicit relative performance evaluation in performance-vested equity grants”

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  • Fabrizio Ferri

    (Harvard University)

Abstract

Carter, Ittner and Zechman (2009) examine the use of explicit relative performance evaluation (RPE) conditions in performance-vested equity plans in a sample of United Kingdom (U.K.) firms in 2002. They find that factors suggested by economic theories (for example, removal of common shocks, tournament theory) are more closely associated with specific features of the plan than with the firm-level decision to use an RPE equity plan. My discussion focuses on the interpretation of these findings and the opportunities and implications for future research. I also summarize the views of five U.K. directors who were involved in the design and use of performance-vested equity plans.

Suggested Citation

  • Fabrizio Ferri, 2009. "Discussion of “Explicit relative performance evaluation in performance-vested equity grants”," Review of Accounting Studies, Springer, vol. 14(2), pages 307-313, September.
    • Handle: RePEc:spr:reaccs:v:14:y:2009:i:2:d:10.1007_s11142-009-9092-9
    DOI: 10.1007/s11142-009-9092-9
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    References listed on IDEAS

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    1. Edward Lee & Konstantinos Stathopoulos & Konstantinos Vonatsos, 2007. "UK Executive Stock Option Valuation: A Conditional Model," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1469-1479, November.
    2. Yu Flora Kuang, 2008. "Performance-vested Stock Options and Earnings Management," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(9-10), pages 1049-1078.
    3. Joseph J. Gerakos & Christopher D. Ittner & David F. Larcker, 2007. "The Structure of Performance-Vested Stock Option Grants," Springer Books, in: Rick Antle & Frøystein Gjesdal & Pierre Jinghong Liang (ed.), Essays in Accounting Theory in Honour of Joel S. Demski, chapter 0, pages 227-249, Springer.
    4. Yu Flora Kuang, 2008. "Performance‐vested Stock Options and Earnings Management," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(9‐10), pages 1049-1078, November.
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    Keywords

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    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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