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dc.contributor.authorBartov, Eli-
dc.contributor.authorMohanram, Partha-
dc.date.accessioned2008-06-13T08:02:28Z-
dc.date.available2008-06-13T08:02:28Z-
dc.date.issued2004-04-
dc.identifier.urihttp://hdl.handle.net/2451/27566-
dc.description.abstractThis paper investigates the decision by top-level executives of more than 1,200 public corporations to exercise large stock option awards in the period 1992-2001. We hypothesize and find that abnormally large option exercises predict stock return future performance. We then hypothesize that this predictive ability represents private information about disappointing earnings in the post-exercise period. Consistent with this hypothesis we find that abnormally positive earnings performance in the pre-exercise period turns to disappointing earnings performance in the post-exercise period, and that this pattern comes as a surprise to even sophisticated market participants (financial analysts). We also hypothesize and find that the disappointing earnings in the post-exercise period represent a reversal of inflated earnings in the pre-exercise period. Collectively, these findings suggest that the private information used by top-level executives to time abnormally large exercises follows from earnings management so as to increase the cash payout of exercises.en
dc.language.isoen_USen
dc.relation.ispartofseriesEli Bartov-06en
dc.subjectExecutive compensationen
dc.subjectIncentivesen
dc.subjectStock option exercisesen
dc.subjectEarnings managementen
dc.titlePrivate Information, Earnings Manipulations, and Executive Stock Option Exercisesen
dc.typeWorking Paperen
Appears in Collections:Accounting Working Papers

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