This paper investigates whether the family ownership affects the aim of stock option plans. Taking advantage of the Italian setting that is representative of a family business environment, we perform a cluster analysis based on the characteristics of plan design to disentangle the incentive from the non-incentive stock option plans. We assume that with increasing of family ownership the overlapping between family and business life exacerbates the agency problems between family and non-family members and posit that the use of pay incentives helps to mitigate these problems. Our logit model reveals that family firms are more likely to grant stock options to family members to align their interests to the ones of non-family owners, especially when a non-family CEO is in charge. This paper contributes to the existing literature on corporate governance in family business. Our results have also practical significance for investors, analysts and policy-makers.

The use of stock option in family firm / Catuogno, Simona; Arena, Claudia; Cirillo, Alessandro; Pennacchio, Luca. - (2016). (Intervento presentato al convegno 2nd International Family Business Research Forum tenutosi a Università di Napoli “Federico II” nel 15 – 17 settembre 2016).

The use of stock option in family firm

CATUOGNO, SIMONA;ARENA, CLAUDIA;PENNACCHIO, LUCA
2016

Abstract

This paper investigates whether the family ownership affects the aim of stock option plans. Taking advantage of the Italian setting that is representative of a family business environment, we perform a cluster analysis based on the characteristics of plan design to disentangle the incentive from the non-incentive stock option plans. We assume that with increasing of family ownership the overlapping between family and business life exacerbates the agency problems between family and non-family members and posit that the use of pay incentives helps to mitigate these problems. Our logit model reveals that family firms are more likely to grant stock options to family members to align their interests to the ones of non-family owners, especially when a non-family CEO is in charge. This paper contributes to the existing literature on corporate governance in family business. Our results have also practical significance for investors, analysts and policy-makers.
2016
The use of stock option in family firm / Catuogno, Simona; Arena, Claudia; Cirillo, Alessandro; Pennacchio, Luca. - (2016). (Intervento presentato al convegno 2nd International Family Business Research Forum tenutosi a Università di Napoli “Federico II” nel 15 – 17 settembre 2016).
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11588/649946
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