Some Empirical Evidence on Options Holding Concentration in Australian Listed Corporations

MGSM Working Paper No. 2004-9

20 Pages Posted: 25 May 2004

See all articles by Tyrone M. Carlin

Tyrone M. Carlin

Southern Cross University

Guy Ford

Macquarie University - Graduate School of Management

Date Written: May 2004

Abstract

This paper discusses options holding concentration, which we define as the proportion of options outstanding under a firm's executive options plan held by a firm's board and the top five non board executives. We examine previous empirical literature on executive options plans and some of the incentive problems associated with the implementation of such plans which have been reported in the literature. On the basis of these discussions, we discuss why it might plausibly be expected that options holding concentration could represent a variable with the power to explain the degree to which incentive problems are encountered by organisations which employ executive options schemes. We report observed options holding concentration for a sample of Australian listed corporations between 1997 and 2002, but demonstrate that while significantly inversely associated with firm size, holdings concentration does not appear to be associated with factors which point towards organisational risk taking and cash payment policy choices. We discuss possible reasons for our findings and suggest potential future research extensions flowing from our work.

Keywords: Executive options, holding concentration, incentive compatibility

Suggested Citation

Carlin, Tyrone M. and Ford, Guy, Some Empirical Evidence on Options Holding Concentration in Australian Listed Corporations (May 2004). MGSM Working Paper No. 2004-9, Available at SSRN: https://ssrn.com/abstract=546842 or http://dx.doi.org/10.2139/ssrn.546842

Tyrone M. Carlin (Contact Author)

Southern Cross University ( email )

Military Road
Lismore, New South Wales 2480
Australia

HOME PAGE: http://https://www.scu.edu.au/about/vice-chancellor/

Guy Ford

Macquarie University - Graduate School of Management ( email )

99 Talavera Road
Sydney, NSW 2113
Australia
+61-2-9850-7813 (Phone)
+61-2-9850-9019 (Fax)