Stock option use by Australian IPOs

Ren, Siewan, Wright, Anna and Wyatt, Anne (2012) Stock option use by Australian IPOs. Journal of Contemporary Accounting and Economics, 8 1: 1-22. doi:10.1016/j.jcae.2012.03.003

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Author Ren, Siewan
Wright, Anna
Wyatt, Anne
Title Stock option use by Australian IPOs
Journal name Journal of Contemporary Accounting and Economics   Check publisher's open access policy
ISSN 1815-5669
Publication date 2012-06-01
Sub-type Article (original research)
DOI 10.1016/j.jcae.2012.03.003
Volume 8
Issue 1
Start page 1
End page 22
Total pages 22
Place of publication Oxford, United Kingdom
Publisher Elsevier
Language eng
Formatted abstract
This paper examines the use of stock options by Australian IPOs. Stock options in this setting exhibit heterogeneity of ‘in the moneyness’ attributes. We can therefore identify incentive ‘out of the money’ options and reward ‘at or in the money’ options and study their usage. The setting also features options granted to employees (CEO, executives, non-executive directors, and managers) and external parties (e.g., underwriters, lenders, seed capitalists, and promoters). We examine the motives for granting stock options with different ‘in the moneyness’ attributes to employees and external parties, as well as the performance outcomes. Our results suggest ‘in the moneyness’ attributes of options vary according to uncertainties about growth options, general operating risks, and/or agency risks relating to the use of IPO proceeds; however, these relations do not translate into robust links from the option grants to future performance.
Keyword Stock options
Initial public offering
Agency contract
Incentives and rewards
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2013 Collection
UQ Business School Publications
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Created: Mon, 30 Apr 2012, 21:21:29 EST by Karen Morgan on behalf of UQ Business School