Please use this identifier to cite or link to this item: https://hdl.handle.net/10356/100562
Title: Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation?
Authors: Guan, Yuyan
Ke, Bin
Chen, Zhihong
Keywords: DRNTU::Business::Accounting
Issue Date: 2013
Source: Chen, Z., Guan, Y., & Ke, B. (2013). Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation? The accounting review, 88(5), 1547-1574.
Series/Report no.: The accounting review
Abstract: We examine the determinants and consequences of stock option compensation to directors of state-controlled Chinese firms that are incorporated outside China and listed in Hong Kong, referred to as state-controlled Red Chip firms, over the period 1990-2005. We find that state-controlled Red Chip firms granted directors a significant number of stock options in response to the demand of foreign investors. However, state-controlled Red Chip firms forced the directors to forfeit a significant percentage of their vested in-the-money stock options due to a conflict between the high-powered stock option compensation and state-controlled Red Chip firms’ unique managerial labor market. We find little evidence that directors’ stock option compensation changed the behavior of state-controlled Red Chip firms. Overall, our results are consistent with the media’s allegation that the stock options granted to directors of many, if not all, state-controlled Red Chip firms are not genuine compensation.
URI: https://hdl.handle.net/10356/100562
http://hdl.handle.net/10220/18176
ISSN: 0001-4826
DOI: http://dx.doi.org/10.2308/accr-50504
Rights: © 2013 American Accounting Association.
Fulltext Permission: none
Fulltext Availability: No Fulltext
Appears in Collections:NBS Journal Articles

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