IDEAS home Printed from https://ideas.repec.org/p/sce/scecfa/193.html
   My bibliography  Save this paper

The Information Contained in the Exercise of Executive Stock Options

Author

Listed:
  • Kyriacos Kyriacou

    (Brunel University)

  • Bryan Mase

    (Brunel University)

Abstract

This paper investigates whether insiders use private information in their decision to exercise executive stock options. Consistent with existing research, exercises overall do not yield subsequent abnormal returns. Categorising exercises by the proportion of stock sold at exercise yields a marked and significant difference in subsequent performance between those accompanied by a ‘high’ and ‘low’ sale proportion respectively. Further, near-the-money exercises produce negative abnormal returns, consistent with such exercises being expensive. The disparity in US and UK executives’ exercise behaviour may be related to the extent to which executive remuneration is linked to shareholder wealth, highlighting the difficulties associated with designing effective remuneration packages for executives

Suggested Citation

  • Kyriacos Kyriacou & Bryan Mase, 2006. "The Information Contained in the Exercise of Executive Stock Options," Computing in Economics and Finance 2006 193, Society for Computational Economics.
  • Handle: RePEc:sce:scecfa:193
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    executive stock options; insider trading; event studies;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

    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:sce:scecfa:193. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/sceeeea.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.