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The effect of shareholder rights and information asymmetry on option-related repurchase activity

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Date Issued:
2015
Summary:
I investigate the effect of shareholder rights and information asymmetry on option-related repurchase activity. Prior research shows that the dilution effect of the exercise of the employee stock options on earnings per share (EPS) decreases the value of stock options. Thus, managers tend to use stock repurchases rather than dividends to return cash to shareholders (the dividend substitution effect). I document that the executive stock option incentives to repurchase stock as a substitute for dividends are stronger when firms have weak shareholder rights and the level of information asymmetry positively influences managerial stock option incentives to repurchase stock. Furthermore, prior research indicates that information asymmetry is positively associated with stock repurchases. I also provide evidence indicating that the relationship between information asymmetry and stock repurchases is stronger when firms have weaker shareholder rights.
Title: The effect of shareholder rights and information asymmetry on option-related repurchase activity.
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Name(s): Golden, Nan, author
Kohlbeck, Mark, Thesis advisor
Florida Atlantic University, Degree grantor
College of Business
School of Accounting
Type of Resource: text
Genre: Electronic Thesis Or Dissertation
Date Created: 2015
Date Issued: 2015
Publisher: Florida Atlantic University
Place of Publication: Boca Raton, Fla.
Physical Form: application/pdf
Extent: 101 p.
Language(s): English
Summary: I investigate the effect of shareholder rights and information asymmetry on option-related repurchase activity. Prior research shows that the dilution effect of the exercise of the employee stock options on earnings per share (EPS) decreases the value of stock options. Thus, managers tend to use stock repurchases rather than dividends to return cash to shareholders (the dividend substitution effect). I document that the executive stock option incentives to repurchase stock as a substitute for dividends are stronger when firms have weak shareholder rights and the level of information asymmetry positively influences managerial stock option incentives to repurchase stock. Furthermore, prior research indicates that information asymmetry is positively associated with stock repurchases. I also provide evidence indicating that the relationship between information asymmetry and stock repurchases is stronger when firms have weaker shareholder rights.
Identifier: FA00004373 (IID)
Degree granted: Dissertation (Ph.D.)--Florida Atlantic University, 2015.
Collection: FAU Electronic Theses and Dissertations Collection
Note(s): Includes bibliography.
Subject(s): Corporate governance
Corporations -- Finance
Dividends -- Econometric models
Employee stock options
Investment analysis
Stock options -- Econometric models
Held by: Florida Atlantic University Libraries
Sublocation: Digital Library
Links: http://purl.flvc.org/fau/fd/FA00004373
Persistent Link to This Record: http://purl.flvc.org/fau/fd/FA00004373
Use and Reproduction: Copyright © is held by the author, with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Use and Reproduction: http://rightsstatements.org/vocab/InC/1.0/
Host Institution: FAU
Is Part of Series: Florida Atlantic University Digital Library Collections.