The effect of executive stock option delta and vega on the spin-off decision

Mieszko Mazur and Galla Salganik-Shoshan

Post-Print from HAL

Abstract: We investigate the role of CEO incentives around asset restructuring known as corporate spin-off. More specifically, we focus on executive stock option delta and vega vis-à-vis changes in firm value and firm riskiness in response to the corporate spin-off. Controlling for self-selection of the spin-off decision, we find that executive stock option vega is positively related to changes in firm value as well as changes in firm risk. Conversely, we find that executive stock option delta is negatively related to changes in firm value and firm risk. Finally, we estimate the Fazzari et al. (1988) investment model and show that at the business segment level, CEO incentives are positively linked to capital spending. Overall, our study extends the current literature by documenting the role of executive stock option delta and vega in the context of corporate spin-offs.

Keywords: Spin-off; Divestiture; Stock option delta; Stock option vega; Executive compensation; Firm risk; Firm value (search for similar items in EconPapers)
Date: 2018-11-08
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published in Quarterly Review of Economics and Finance, 2018, ⟨10.1016/j.qref.2018.11.003⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: The effect of executive stock option delta and vega on the spin-off decision (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02116144

DOI: 10.1016/j.qref.2018.11.003

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().