Executive Stock Option and Abnormal Stock Returns- Evidence from Electronic Industry

• Main Authors: Penny Lu, 呂佩玲
• Other Authors: none
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/05676455414976658559

碩士 === 中原大學 === 會計研究所 === 95 === This study attempts to examine whether the top management of the publicly listed electronic companies in Taiwan are beneficial or not for implementing the Employee Stock Option Plans (ESOP) on the granting day or executing day to manage the earnings and manipulate the stock prices of the company. First, this study examines the relationship between ESOP and the abnormality of stock returns on the granting day, this investigation utilizes 284 samples of electronic firms in Taiwan which implements ESOP from January 2001 to December 2006 to examine whether there is an abnormality of stock return on the day of granting stock options. This study then collects 353 top managements of electronic firms who exercising ESOP from May 2004 to December 2006 for exploring the relationship between the abnormality of stock return and Chairman, President as well as CEO’s earnings management on the day of exercising stock option. This work uses calendar-time approach and the modified Jone’s Model to measure whether the top management manipulates the management earnings and stock prices of the company. The empirical results are summarized as follows: (1) there is a negatively abnormal return before the day on which the company granted ESOP and it has a positively abnormal return after that day. (2) there are positively abnormal stock returns during the post-exercising period. (3) the top management of the electronic companies inclined to postpone announcing the good news to public and to advance declaring the bad news to investors thru the Market Observation Post System. This investigation does not find top managements significantly utilize the accruals to manage earnings of the company during the exercising period. However, the finding indicates that the top managements inclined to utilize the accruals to manage the earnings of the company during the post-exercising period.