Market reaction to long-term incentive plan adoption: Equity dilution as an explanatory variable

Sankaran Venkateswar

The British Accounting Review, 1992, vol. 24, issue 1, 67-76

Abstract: Long-term incentive plans are instituted to motivate top corporate executives and align principal-agent interests. Among others, forms of long-term incentive compensation include cash and stock awards, stock options, performance shares, stock appreciation rights, phantom stock, and participating units. The general contention behind instituting these awards is that they increase long-term shareholder wealth. Preliminary studies by Brickley, Bhagat & Lease (1985), and Tehranian & Waeglein (1985), support this contention. However, Jones (1980a, b) documents evidence to show that shareholder groups do not view the impact of all incentive plans favourably.

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:24:y:1992:i:1:p:67-76

DOI: 10.1016/S0890-8389(05)80068-X

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