The incentive effect of PVSOs
This study of Bo Qin aims at assessing the incentive effect of performance-vested stock options (PVSOs) in the context of corporate governance. He also examined the role of corporate goverance in determining the presence and level of the PVSO awards. PVSOs can outperform traditional stock options by better aligning the interests of shareholders and managers.
Corporations with severe principal-agent problems and week corporate governance features will adopt PVSO plans early; However, these early adopters may symbolically employ PVSO plans in order to placate activist investors and alleviate external criticism on the disputative compensation practices. And the executives with more controlling power over the board will try various means to get away from PVSOs, given that PVSOs impose additional difficulties to executive pay.
Stock options could generate considerable risk-taking incentives by providing top managers with limited downside risk together with unlimited upside potential. CEO risk-taking incentives stemming from stocks and stock options are captured in the credit rating grades given by rating agencies, which reflect on the overall credit risk of the company concerned.
PhD ceremony: Mr. B. Qin, Thursday 18 March, 16.15 hour, Academiegebouw, Broerstraat 5, Groningen
Thesis: Essays on performance-vested stock options and corporate governance
Promotor(s): prof. J. van der Meer-Kooistra, prof. A. van Witteloostuijn
Faculty: Economics and Business
Last modified: | 31 January 2018 11.54 a.m. |
More news
-
19 April 2024
New thesis prize for master's students of Economics and Business
How can we encourage economics and business students to deal with important societal challenges in their master's thesis? The 14 Dutch faculties of economics and business, united in the Council of Deans in Economics and Business (DEB), have set up...
-
18 April 2024
Ward Romeijnders appointed as Professor of Optimization under Uncertainty
The Faculty of Economics and Business is pleased to announce that Ward Romeijnders has been appointed as Professor of Optimization under Uncertainty. The chair is situated within the Department of Operations.
-
12 April 2024
Inaugural Lecture Corine Noordhoff: Future ready retail
In her inaugural lecture, Professor of Retail Marketing Corine Noordhoff will provide insights in the cornerstones for survival and adaptation in the retail sector. Noordhoff’s inaugural lecture will take place on Friday 19 April 2024, 16:15 –...