Non-dividend protected executive options and dividend policy: Evidence from SFAS 123R

Jean Canil

Journal of Corporate Finance, 2017, vol. 44, issue C, 15-33

Abstract: We examine how granting non-dividend protected executive options affects payout policy during the period 2001–2008. Using a difference-in-difference estimation along with the introduction of SFAS 123R, we find that firms with non-optioned executives increase dividends more than firms with optioned executives, post- versus pre-SFAS 123R. Our result questions whether non-dividend protected executive options are an impediment to paying dividends. Our result is robust pre-SFAS 123R dividends, consistent and inconsistent dividend payers and firms dropping options completely post-SFAS 123R, as well as controlling for endogeneity. Our evidence suggests that expensing of options has no effect on dividend policy.

Keywords: Executive options; Dividends; Share repurchases; SFAS 123R; Expensing (search for similar items in EconPapers)
JEL-codes: G30 G32 G38 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:44:y:2017:i:c:p:15-33

DOI: 10.1016/j.jcorpfin.2017.03.003

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