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

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

Research output: Contribution to journalArticle

84 Citations (Scopus)

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
StatePublished - Oct 2003
Externally publishedYes

Fingerprint

Initial public offerings
Stock options
Equity
Chief executive officer
Equity ownership
Investors
Incentives
Premium
Risk taking

ASJC Scopus subject areas

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

Cite this

Giving money to get money : How CEO stock options and CEO equity enhance IPO valuations. / Certo, Samuel; Daily, Catherine M.; Cannella, Albert A.; Dalton, Dan R.

In: Academy of Management Journal, Vol. 46, No. 5, 10.2003, p. 643-653.

Research output: Contribution to journalArticle

Certo, Samuel ; Daily, Catherine M. ; Cannella, Albert A. ; Dalton, Dan R. / Giving money to get money : How CEO stock options and CEO equity enhance IPO valuations. In: Academy of Management Journal. 2003 ; Vol. 46, No. 5. pp. 643-653.
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