Does option-based compensation affect payout policyé Evidence from FAS 123R

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

Does option-based compensation affect payout policyé To address this question, we examine the adoption of mandatory expensing of stock options. Our identification strategy exploits the fact that the reduction in option-based compensation after the accounting change varies with the firm-specific expected accounting impact. Across a battery of tests, we do not find that (accounting-driven) reductions in option-based pay cause dividends to increase or repurchases to decrease. Our results contrast with the widely held belief that option-based pay has a significant causal influence on payout policy and cast doubts on its role in the shift from dividends to repurchases.

Original languageEnglish (US)
Pages (from-to)291-329
Number of pages39
JournalJournal of Financial and Quantitative Analysis
Volume55
Issue number1
DOIs
StatePublished - Feb 1 2020

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Does option-based compensation affect payout policyé Evidence from FAS 123R'. Together they form a unique fingerprint.

Cite this