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Share-Option Based Compensation Expense, Shareholder Returns and Financial Crisis.pdf (448.82 kB)

Share-option based compensation expense, shareholder returns and financial crisis

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journal contribution
posted on 2023-06-09, 15:27 authored by Alaa Alhaj-Ismail, Sami AdwanSami Adwan, John Stittle
This paper contributes to the literature that analyses the relationship between Share-Option Based Compensation (SOBC) expense and shareholder returns. It utilises a sample of financial firms listed in the European Economic Area and Switzerland between 2005 and 2016 to make inferences about the impact of the financial crisis on the above-mentioned relationship. The paper also assesses the extent to which the relationship between SOBC expense and shareholder returns during the financial crisis varies with ownership concentration. We find evidence that the positive relationship between SOBC expense and shareholder returns is significantly more apparent during the financial crisis. This suggests that investors place more emphasis on the unrecognised intangible features of SOBC contracts during the crisis, even though their associated expenses are subject to managerial discretion and measurement errors. We also find that the positive relationship between SOBC expense and shareholder returns over the financial crisis is more pronounced when ownership is more concentrated. The results of our study are robust after controlling for firm size, potential investment growth opportunities, traditional banking activities and firm self-selection bias.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Journal of Contemporary Accounting and Economics

ISSN

1815-5669

Publisher

Elsevier

Issue

1

Volume

15

Page range

20-35

Department affiliated with

  • Accounting and Finance Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2018-10-10

First Open Access (FOA) Date

2020-05-05

First Compliant Deposit (FCD) Date

2018-10-09

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