Giving money to get money: How CEO stock options and CEO equity enhance IPO valuations

S. Trevis Certo, Catherine M. Daily, Albert A. Cannella, Dan R. Dalton

Research output: Contribution to journalArticle

88 Scopus citations

Abstract

Recent research has suggested that stock options and equity ownership have different motivational implications for executive risk taking. We examined investors' reactions to the differing incentive properties of stock options and equity ownership in the context of firms undertaking initial public offerings (IPOs). We found that stock options and equity ownership interacted to influence the premiums that investors applied to IPO firms. We suggest that the effectiveness of CEO stock options may depend on the level of CEO equity.

Original languageEnglish (US)
Pages (from-to)643-653
Number of pages11
JournalAcademy of Management Journal
Volume46
Issue number5
DOIs
StatePublished - Oct 2003

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting(all)
  • Strategy and Management
  • Management of Technology and Innovation

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