The information content of options trading for the CEO employee pay ratio

IF 1.9 Q2 BUSINESS, FINANCE

Review of Quantitative Finance and Accounting Pub Date : 2024-06-16 DOI:10.1007/s11156-024-01307-y

Pei-Fang Hsieh, Zih-Ying Lin

引用次数: 0

Abstract

This research examines how option trading activity reduces information asymmetry through the CEO’s and ordinary employee’s awareness of firm value and their pay related to firm performance. Our findings demonstrate that companies with more options trading activity have a higher CEO-employee pay ratio, which is consistent with the tournament theory. Option trading illustrates that both CEOs and employees understand their relevant payment based on the precise firm value. This advantage of option trading becomes weak for firms with higher profitability, for employees with more bargaining power, and for CEOs with a higher risk incentive.

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期权交易中 CEO 员工薪酬比的信息含量

本研究探讨了期权交易活动如何通过首席执行官和普通员工对公司价值及其薪酬与公司业绩相关性的认识来减少信息不对称。我们的研究结果表明，期权交易活动越活跃的公司，首席执行官与员工的薪酬比例越高，这与锦标赛理论是一致的。期权交易表明，首席执行官和员工都了解他们的相关薪酬是基于精确的公司价值。对于盈利能力较强的公司、议价能力较强的员工以及风险激励较高的首席执行官来说，期权交易的这一优势会变得很弱。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Review of Quantitative Finance and Accounting BUSINESS, FINANCE-

CiteScore

3.20

自引率

17.60%

发文量

期刊介绍： Review of Quantitative Finance and Accounting deals with research involving the interaction of finance with accounting, economics, and quantitative methods, focused on finance and accounting. The papers published present useful theoretical and methodological results with the support of interesting empirical applications. Purely theoretical and methodological research with the potential for important applications is also published. Besides the traditional high-quality theoretical and empirical research in finance, the journal also publishes papers dealing with interdisciplinary topics.