Mehdi, Bouras and Mohamed Imen, Gallali
(2014)
The Determinants Of Equity Based
Compensation: A Bidimensional Validity Of The
Agency Theory.
Asian Academy of Management Journal of Accounting and Finance, 10 (2).
pp. 1-29.
ISSN 1823-4992
Abstract
Previous studies have tried to make a comparative analysis between the market-oriented
system and the mixed governance system on the determinants of stock option awards for
managers; however, these studies exhibit some failures that must be overcome. In
addition, we note the absence of studies addressing the validity of the agency theory on
the determinants of equity-based compensation in times of instability or crisis. We used a
sample of 159 French companies and 203 US companies for the period spanning 2002 to
2010. The results of the present study support the conclusion that the variables measuring
the size of the firm, growth opportunity, debt, management and control functions, size of
the board, and ownership concentration explain the decision to grant equity-based
compensation, regardless of the sample and period considered. Using a variable
representing the presence of institutional investors, we show that this type of investor is
only involved in controlling the leader in the French case, during a period of financial
instability.
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