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Title: Reaction of bond markets to CEO option exercises
Authors: Swetha Balachandran
Rahul Bali
Teo, Amos Kuan Ping
Keywords: DRNTU::Business::Finance::Fixed income::Bonds
Issue Date: 2011
Abstract: Despite the large literature about the effect of CEO option compensation on shareholder value, little is understood on how this option compensation affects bondholder welfare. In this paper, we investigate the bond price reaction toward CEO option exercises. We find a significant positive reaction of bond price when the CEO exercises their stock option. The evidence is consistent with the view that stock option exercise decreases the CEO’s risk-taking incentives and thus is a positive event for bondholders.
Rights: Nanyang Technological University
Fulltext Permission: restricted
Fulltext Availability: With Fulltext
Appears in Collections:NBS Student Reports (FYP/IA/PA/PI)

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