Share-Option Based Compensation Expense, Shareholder Returns and Financial Crisis

Alaa Alhaj Ismail, Sami Adwan, John Stittle

Research output: Contribution to journalArticle

2 Citations (Scopus)
7 Downloads (Pure)

Abstract

This paper contributes to the literature that analyses the relationship between Share-Option Based Compensation (SOBC) expense and shareholder returns. It utilises a sample of financial firms listed in the European Economic Area and Switzerland between 2005 and 2016 to make inferences about the impact of the financial crisis on the above-mentioned relationship. The paper also assesses the extent to which the relationship between SOBC expense and shareholder returns during the financial crisis varies with ownership concentration. We find evidence that the positive relationship between SOBC expense and shareholder returns is significantly more apparent during the financial crisis. This suggests that investors place more emphasis on the unrecognised intangible features of SOBC contracts during the crisis, even though their associated expenses are subject to managerial discretion and measurement errors. We also find that the positive relationship between SOBC expense and shareholder returns over the financial crisis is more pronounced when ownership is more concentrated. The results of our study are robust after controlling for firm size, potential investment growth opportunities, traditional banking activities and firm self-selection bias.
Original languageEnglish
Pages (from-to)20-35
Number of pages16
JournalJournal of Contemporary Accounting and Economics
Volume15
Issue number1
Early online date5 Nov 2018
DOIs
Publication statusPublished - Apr 2019
EventFaculty of Business and Law annual Internal Research Conference 2017 - Jaguar Building, Coventry, United Kingdom
Duration: 29 Jun 201730 Jun 2017
https://www.eventsforce.net/cu/frontend/reg/thome.csp?pageID=980928&eventID=3972&traceRedir=2&eventID=3972

Bibliographical note

NOTICE: this is the author’s version of a work that was accepted for publication in Contemporary Accounting and Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Contemporary Accounting and Economics, [15], (2018) DOI: 10.1016/j.jcae.2018.11.001

© 2017, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

Keywords

  • IFRS 2
  • Share based compensation
  • financial crisis
  • large shareholders
  • financial institutions
  • Financial institution
  • And large shareholders
  • Share-based payment
  • Financial crisis

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting (miscellaneous)

Fingerprint Dive into the research topics of 'Share-Option Based Compensation Expense, Shareholder Returns and Financial Crisis'. Together they form a unique fingerprint.

  • Cite this