Journal of Corporate Finance Vol. 44 2017
Non-dividend protected executive options and dividend policy: Evidence from SFAS 123R
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.
- DOI
- 10.1016/j.jcorpfin.2017.03.003
- Volume
- 44
- Pages
- 15-33
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex