Rescission and repricing of executive stock options: Repricing alternatives, optimal repricing policy, and early exercise

Persistent Link:
http://hdl.handle.net/10150/280074
Title:
Rescission and repricing of executive stock options: Repricing alternatives, optimal repricing policy, and early exercise
Author:
Yang, Twan-Shan
Issue Date:
2002
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
This dissertation consists of two chapters. Chapter 1 examines the ex-ante optimality of repricing and rescission of executive stock options while considering dilution effects and the tax effects of new accounting rules associated with repricing and rescission. Traditional repricing lowers the exercise price of outstanding options to match the declined market value of the stock. Rescission allows employees to cancel already-exercised options when share prices fall, which was not an issue until 2000 when the stock market plummeted. To my best knowledge, this study is the first research on examining the possible optimality of traditional repricing and rescission while considering the economic impact of changing accounting rules in an ex-ante contracting setting. Chapter 2 examines the ex-ante optimality of repricing alternatives and derives an optimal repricing-triggered policy, which specify how deeply the options are under water before repricing takes place. In practice, traditional repricing practices have become obsolete since new accounting rules took effect in July 2000. To avoid associated variable accounting charges that cause uncertainty in future reported earnings, companies have tried several repricing alternatives as solutions to rescuing underwater options. This study not only justifies the occurrence of some repricing alternatives but also quantifies the impact of the marking-to-market feature imbedded in the new accounting rules.
Type:
text; Dissertation-Reproduction (electronic)
Keywords:
Business Administration, Accounting.; Business Administration, Management.; Economics, Finance.
Degree Name:
Ph.D.
Degree Level:
doctoral
Degree Program:
Graduate College; Business Administration
Degree Grantor:
University of Arizona
Advisor:
Carleton, Willard T.

Full metadata record

DC FieldValue Language
dc.language.isoen_USen_US
dc.titleRescission and repricing of executive stock options: Repricing alternatives, optimal repricing policy, and early exerciseen_US
dc.creatorYang, Twan-Shanen_US
dc.contributor.authorYang, Twan-Shanen_US
dc.date.issued2002en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractThis dissertation consists of two chapters. Chapter 1 examines the ex-ante optimality of repricing and rescission of executive stock options while considering dilution effects and the tax effects of new accounting rules associated with repricing and rescission. Traditional repricing lowers the exercise price of outstanding options to match the declined market value of the stock. Rescission allows employees to cancel already-exercised options when share prices fall, which was not an issue until 2000 when the stock market plummeted. To my best knowledge, this study is the first research on examining the possible optimality of traditional repricing and rescission while considering the economic impact of changing accounting rules in an ex-ante contracting setting. Chapter 2 examines the ex-ante optimality of repricing alternatives and derives an optimal repricing-triggered policy, which specify how deeply the options are under water before repricing takes place. In practice, traditional repricing practices have become obsolete since new accounting rules took effect in July 2000. To avoid associated variable accounting charges that cause uncertainty in future reported earnings, companies have tried several repricing alternatives as solutions to rescuing underwater options. This study not only justifies the occurrence of some repricing alternatives but also quantifies the impact of the marking-to-market feature imbedded in the new accounting rules.en_US
dc.typetexten_US
dc.typeDissertation-Reproduction (electronic)en_US
dc.subjectBusiness Administration, Accounting.en_US
dc.subjectBusiness Administration, Management.en_US
dc.subjectEconomics, Finance.en_US
thesis.degree.namePh.D.en_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.disciplineBusiness Administrationen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.contributor.advisorCarleton, Willard T.en_US
dc.identifier.proquest3060940en_US
dc.identifier.bibrecord.b43034974en_US
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