Corporate Payout Policy and Management Stock Incentives

摘要

We examine how corporate payout policy is affected by managerial stock incentives211u001eusing data on more than 1100 nonfinancial firms during 1993-97. We find that 211u001emanagement share ownership encourages higher payouts by firms with potentially 211u001ethe greatest agency problems--those with low market-to-book ratios and low 211u001emanagement stock ownership. We also find that management stock options change the 211u001ecomposition of payouts. We find a strong negative relationship between dividends 211u001eand management stock options, as predicted by Lambert, Lannen, and Larcker 211u001e(1989), and a positive relationship between repurchases and management stock 211u001eoptions. Our results suggest that the growth in stock options may help to explain 211u001ethe rise in repurchases at the expense of dividends.