Executive stock options and corporate report disclosures: Managerial power and outrage costs perspectives

Journal article


Kelly, Elisha and Mroczkowski, Nicholas Andrew. (2011). Executive stock options and corporate report disclosures: Managerial power and outrage costs perspectives. International Journal of Economics and Accounting. 2(2), pp. 145 - 172. https://doi.org/10.1504/IJEA.2011.040112
AuthorsKelly, Elisha and Mroczkowski, Nicholas Andrew
Abstract

This study examines annual report disclosures of executive stock option(s) (ESOs) values by Australian listed companies for periods ending 2002 and 2003. This period was a 'one-time' window of opportunity in which the Australian regulations for disclosing option values in financial statements were unclear, thus allowing preparers some latitude in the application of pricing regimes for the purpose of disclosure. The study further investigates the relation between reported option values and factors known to influence option valuations. Given the growing public concerns regarding director's excessive compensation schemes and the governance of enterprises generally, this study provides evidence that directors have incentives to underreport the value of executive options. The evidence suggests that not only do directors have the power to award themselves excessive compensation, but also the mechanisms to camouflage excessive remuneration to avoid stakeholder dissent. This is the first known Australian study that examines option valuations in the context of managerial power and outrage cost theories.

Year2011
JournalInternational Journal of Economics and Accounting
Journal citation2 (2), pp. 145 - 172
PublisherInderscience Publishers
ISSN2041-868X
Digital Object Identifier (DOI)https://doi.org/10.1504/IJEA.2011.040112
Web address (URL)http://www.inderscience.com/offer.php?id=40112
Page range145 - 172
Research GroupPeter Faber Business School
Place of publicationUnited Kingdom
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https://acuresearchbank.acu.edu.au/item/8835q/executive-stock-options-and-corporate-report-disclosures-managerial-power-and-outrage-costs-perspectives

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