Stock Options and Dividend Protection

Arnold, Markus C.; Gillenkirch, Robert M. (2005). Stock Options and Dividend Protection. Journal of institutional and theoretical economics / Zeitschrift für die gesamte Staatswissenschaft, 161(3), pp. 453-472. Mohr Siebeck 10.1628/093245605774259318

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Stock-option programs (SOPs) became the dominant compensation instrument for top management in the nineties. Usually, they are not dividend-protected, i.e., any dividend payout decreases the value of a manager's options. Empirical evidence shows that this results in a significant decrease in the level of corporate dividends and, at the same time, in an increase in share repurchases. This paper analyzes different forms of dividend protection and addresses the importance of dividend protection in SOPs. Finally, the paper relates the theoretical analysis to empirical work on the link between share repurchases and SOPs.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute for Accounting and Controlling > Managerial Accounting

UniBE Contributor:

Arnold, Markus Christopher

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0932-4569

Publisher:

Mohr Siebeck

Language:

English

Submitter:

Lynn Carole Selhofer

Date Deposited:

11 Mar 2020 13:23

Last Modified:

11 Mar 2020 13:32

Publisher DOI:

10.1628/093245605774259318

BORIS DOI:

10.7892/boris.141310

URI:

https://boris.unibe.ch/id/eprint/141310

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