Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation?
We examine the determinants and consequences of stock option compensation to directors of state-controlled Chinese firms that are incorporated outside China and listed in Hong Kong, referred to as state-controlled Red Chip firms, over the period 1990-2005. We find that state-controlled Red Chip firm...
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Format: | Journal Article |
Language: | English |
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2013
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Online Access: | https://hdl.handle.net/10356/100562 http://hdl.handle.net/10220/18176 |
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author | Guan, Yuyan Ke, Bin Chen, Zhihong |
author2 | Nanyang Business School |
author_facet | Nanyang Business School Guan, Yuyan Ke, Bin Chen, Zhihong |
author_sort | Guan, Yuyan |
collection | NTU |
description | We examine the determinants and consequences of stock option compensation to directors of state-controlled Chinese firms that are incorporated outside China and listed in Hong Kong, referred to as state-controlled Red Chip firms, over the period 1990-2005. We find that state-controlled Red Chip firms granted directors a significant number of stock options in response to the demand of foreign investors. However, state-controlled Red Chip firms forced the directors to forfeit a significant percentage of their vested in-the-money stock options due to a conflict between the high-powered stock option compensation and state-controlled Red Chip firms’ unique managerial labor market. We find little evidence that directors’ stock option compensation changed the behavior of state-controlled Red Chip firms. Overall, our results are consistent with the media’s allegation that the stock options granted to directors of many, if not all, state-controlled Red Chip firms are not genuine compensation. |
first_indexed | 2024-10-01T06:19:11Z |
format | Journal Article |
id | ntu-10356/100562 |
institution | Nanyang Technological University |
language | English |
last_indexed | 2024-10-01T06:19:11Z |
publishDate | 2013 |
record_format | dspace |
spelling | ntu-10356/1005622023-05-19T06:44:41Z Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation? Guan, Yuyan Ke, Bin Chen, Zhihong Nanyang Business School DRNTU::Business::Accounting We examine the determinants and consequences of stock option compensation to directors of state-controlled Chinese firms that are incorporated outside China and listed in Hong Kong, referred to as state-controlled Red Chip firms, over the period 1990-2005. We find that state-controlled Red Chip firms granted directors a significant number of stock options in response to the demand of foreign investors. However, state-controlled Red Chip firms forced the directors to forfeit a significant percentage of their vested in-the-money stock options due to a conflict between the high-powered stock option compensation and state-controlled Red Chip firms’ unique managerial labor market. We find little evidence that directors’ stock option compensation changed the behavior of state-controlled Red Chip firms. Overall, our results are consistent with the media’s allegation that the stock options granted to directors of many, if not all, state-controlled Red Chip firms are not genuine compensation. 2013-12-09T03:10:21Z 2019-12-06T20:24:29Z 2013-12-09T03:10:21Z 2019-12-06T20:24:29Z 2013 2013 Journal Article Chen, Z., Guan, Y., & Ke, B. (2013). Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation? The accounting review, 88(5), 1547-1574. 0001-4826 https://hdl.handle.net/10356/100562 http://hdl.handle.net/10220/18176 10.2308/accr-50504 en The accounting review © 2013 American Accounting Association. 50 p. |
spellingShingle | DRNTU::Business::Accounting Guan, Yuyan Ke, Bin Chen, Zhihong Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation? |
title | Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation? |
title_full | Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation? |
title_fullStr | Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation? |
title_full_unstemmed | Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation? |
title_short | Are stock option grants to directors of state-controlled chinese firms listed in Hong Kong genuine compensation? |
title_sort | are stock option grants to directors of state controlled chinese firms listed in hong kong genuine compensation |
topic | DRNTU::Business::Accounting |
url | https://hdl.handle.net/10356/100562 http://hdl.handle.net/10220/18176 |
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