Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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Effect of Earnings Management and Stock Options on the Disclosure Effect of Share Repurchases

이익조정과 스톡옵션이 자사주 매입 공시효과에 미치는 영향

  • Kim, Kyung-Soon (Department of Business Administration, Chosun University) ;
  • Kim, Yu-jin (Business Administration, Graduate School, Chosun University) ;
  • Kim, Hong-Ryeol (Business Administration, Graduate School, Chosun University)
  • Received : 2021.08.31
  • Accepted : 2021.09.21
  • Published : 2021.09.30
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Abstract

Purpose - The purpose of this paper is to investigate the relationship between earnings management and the disclosure effect of share repurchase. In addition, we analyze whether the relationship between earnings management and share repurchase is affected by executive stock options. Design/methodology/approach - We calculate the discretionary accrual amount for the year immediately preceding the share repurchase and the cumulative excess return around the announcement of the share repurchase, and examine the relationship between the two by regression analysis. Findings - We confirmed a negative relationship between discretionary accrual in the year immediately preceding the share repurchase and the market response to the share repurchase disclosure. In particular, it was found that the negative relationship between discretionary accrual and stock price return on share repurchase announcement was found to decrease in companies to which executive stock options were granted. Research implications or Originality - When uncertainties exist in the motives for share repurchase, we find that earnings management and executive stock options can be useful tools for reducing the adverse selection risk inherent in share repurchase announcements.

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Acknowledgement

이 논문은 조선대학교 학술연구비의 지원을 받아 연구되었음(2021)

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