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Executive stock option vesting conditions, corporate governance and CEO attributes: evidence from Australia

Xin Qu, Majella Percy, Jenny Stewart and Fang Hu

Accounting and Finance, 2018, vol. 58, issue 2, 503-533

Abstract: We investigate the association between executive stock option (ESO) vesting conditions, corporate governance and CEO attributes. Using observations from the 250 largest Australian firms, we find that stronger corporate governance is positively associated with the length of the vesting period and the use of performance hurdles. We also find that when CEOs approach retirement, firms are more likely to grant longer time†vesting options but are less likely to impose performance hurdles. Further, more powerful CEOs appear to influence the granting of ESOs with less restrictive vesting conditions. Our findings suggest that both corporate governance and CEO attributes significantly shape the design of ESOs.

Date: 2018
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Handle: RePEc:bla:acctfi:v:58:y:2018:i:2:p:503-533