The Valuation Differences Between Stock Option and Restricted Stock Grants for US Firms

James H. Irving · Wayne R. Landsman · Bradley P. Lindsey

43 citations0/0 files storedJournal of Business Finance &amp Accounting

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Corporate Finance and Governance Financial Markets and Investment Strategies Financial Reporting and Valuation Research

Abstract

Abstract: In this study, we document a significant shift over the past several years from stock option‐based compensation to restricted stock‐based compensation. Additionally, we evaluate whether stock option grants and restricted stock grants result in similar valuation consequences for firms. We estimate cross‐sectional valuation equations that include the value of stock option and restricted stock grants summed over the current and past two years, residual income, and book value of equity, after controlling for endogeneity. Consistent with prior research, our findings indicate that the market on average values stock option grants positively. However, in contrast to stock option grants, restricted stock grants are valued negatively. This result is consistent with restricted stock grants lacking the positive incentive effects of stock options and being viewed as a liability or expense to the firm.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 43 citations exist upstream.

References

2003Corporate Governance and Equity Prices 1995Earnings, Book Values, and Dividends in Equity Valuation*1999The use of equity grants to manage optimal equity incentive levels 2010Correcting for Cross-Sectional and Time-Series Dependence in Accounting Research 2002Stock options for undiversified executives 1999An empirical assessment of the residual income valuation model 1998Relative valuation roles of equity book value and net income as a function of financial health 2001Stock option plans for non-executive employees

Cited by

2019Rank and file equity compensation and earnings management: Evidence from stock options 2018Stock option pay versus restricted stock: A comparative analysis of their impact on managerial risk-taking and performance extremeness 2017The impact of equity incentive plans on analysts’ earnings forecasts and stock recommendations for Chinese listed firms: An empirical study 2011Integrating Research into an Undergraduate Accounting Course

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.