Abstract
Prior research suggests that managers use income-increasing (decreasing) accruals to increase the value of their stock option exercises (grants). I extend this research by modeling firms' accrual choices when incentives from stock options conflict and are confounded by other stock option features. I find that when incentives to maximize the values of option exercises (unvested options) and option grants (vested options) conflict, firms select accounting accruals to maximize the value of option exercises (unvested options). Surprisingly, despite the presence of vested options, firms use income-decreasing accruals in order to increase the value of option grants.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
