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Executive stock option vesting conditions, corporate governance and CEO attributes: evidence from Australia
Author(s) -
Qu Xin,
Percy Majella,
Stewart Jenny,
Hu Fang
Publication year - 2018
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12223
Subject(s) - vesting , corporate governance , business , stock (firearms) , accounting , stock options , executive compensation , finance , political science , law , engineering , mechanical engineering
We investigate the association between executive stock option ( ESO ) vesting conditions, corporate governance and CEO attributes. Using observations from the 250 largest Australian firms, we find that stronger corporate governance is positively associated with the length of the vesting period and the use of performance hurdles. We also find that when CEO s approach retirement, firms are more likely to grant longer time‐vesting options but are less likely to impose performance hurdles. Further, more powerful CEO s appear to influence the granting of ESO s with less restrictive vesting conditions. Our findings suggest that both corporate governance and CEO attributes significantly shape the design of ESO s.