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MANAGERIAL INCENTIVES AT THE INITIAL PUBLIC OFFERING: AN EMPIRICAL ANALYSIS OF THE ALTERNATIVE INVESTMENT MARKET

The Rise and Fall of Europe's New Stock Markets

ISBN: 978-0-76231-137-8, eISBN: 978-1-84950-293-1

ISSN: 1569-3732

Publication date: 10 November 2004

Abstract

This chapter examines the determinants of managerial incentives at the time of an Initial Public Offering (IPO) on the Alternative Investment Market (AIM) of the London Stock Exchange. We identify a trade-off relation between board monitoring and incentives that is specific to CEOs. We also investigate the role of stock option grants and share transactions at the IPO. We find that the IPO may be used as a wealth diversification opportunity. We report that undiversified managers with large pre-IPO shareholdings receive smaller stock options grants and sell more shares in the IPO than more diversified managers.

Citation

Roosenboom, P. (2004), "MANAGERIAL INCENTIVES AT THE INITIAL PUBLIC OFFERING: AN EMPIRICAL ANALYSIS OF THE ALTERNATIVE INVESTMENT MARKET", Giudici, G. and Roosenboom, P. (Ed.) The Rise and Fall of Europe's New Stock Markets (Advances in Financial Economics, Vol. 10), Emerald Group Publishing Limited, Bingley, pp. 81-112. https://doi.org/10.1016/S1569-3732(04)10004-2

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited