Employee Stock Options Plans and the Value of Brazilian Companies

Fernanda Perobelli, Bruno de Souza Lopes () and Alexandre Di Miceli da Silveira ()
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Bruno de Souza Lopes: Universidade de São Paulo (USP)

Brazilian Review of Finance, 2012, vol. 10, issue 1, 105-147

Abstract: This work investigates the effects of Employee Stock Options Plans (ESOP) on the value of companies in the Brazilian Stock Exchange (BM&FBOVESPA). An ESOP is a mechanism of variable compensation, generally offered to executives, having the alignment of interests between managers and shareholders as one of its goals. To achieve this purpose, a panel data analysis was used in order to try measuring if the ESOP generated or not value to shareholders. The results show that there is evidence that the ESOP only generates wealth for shareholders when it is well-set, specifically when the exercise price is fixed at-money or out-of-money. An increase in the stock price is also achieved when companies adopt best practices of corporate governance and the ESOP by more than three years.

Keywords: Employee Stock Options Plans; Corporate governance; Variable compensation; Panel data (search for similar items in EconPapers)
JEL-codes: C33 G3 J33 (search for similar items in EconPapers)
Date: 2012
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