What Determines Stock Option Contract Design?

This paper analyzes factors driving the design of stock option plans for Finnish firms. We examine determinants of the scope of plans, exercise price, target group, and dividend protection. The scope is found to be negatively related to Tobin���s Q and positively related to proxies for monitoring costs. The scope is also greater in broad-based plans, and in plans with dividend protection. Prior stock return is found to be negatively related to the size of the premium (out-of-the-moneyness), whereas dividend protection increases the premium. The results also suggest that investment intensity, cash flow, and monitoring costs are associated with the likelihood of granting premium (out-of-the-money) stock options. Furthermore, the likelihood of granting broad-based plans is increasing in institutional ownership and cash flow constraints, and decreasing in firm size. Broad-based plans are also more likely among firms in growth industries. We find support that the likelihood of dividend protection is decreasing in foreign ownership. In addition, firms paying zero-dividends are less likely to include dividend protection, whereas higher unsystematic risk is associated with a greater likelihood of including dividend protection.

Stock Option Compensation in Finland: An Analysis of Economic Determinants, Contracting Frequency, and Design

This paper addresses several questions in the compensation literature by examining stock option compensation practices of Finnish firms. First, the results indicate that principal-agent theory succeeds quite well in predicting the use of stock options. Proxies for monitoring costs, growth opportunities, ownership structure, and risk are found to determine the use of incentives consistent with theory. Furthermore, the paper examines whether determinants of stock options targeted to top management differ from determinants of broad-based stock option plans. Some evidence is found that factors driving these two types of incentives differ. Second, the results reveal that systematic risk significantly increases the likelihood that firms adopt stock option plans, whereas total firm risk and unsystematic risk do not seem to affect this decision. Third, the results show that growth opportunities are related to time-dimensional contracting frequency, consistent with the argument that incentive levels deviate more rapidly from optimum in firms with high growth opportunities. Finally, the results suggest that vesting schedules are decreasing in financial leverage, and that contract maturity is decreasing in firm focus. In addition, both vesting schedules and contract maturity tend to be longer in firms involving state ownership.

A heuristic clustering algorithm using union of overlapping pattern-cells

Relative geometric arrangements of the sample points, with reference to the structure of the imbedding space, produce clusters. Hence, if each sample point is imagined to acquire a volume of a small M-cube (called pattern-cell), depending on the ranges of its (M) features and number (N) of samples; then overlapping pattern-cells would indicate naturally closer sample-points. A chain or blob of such overlapping cells would mean a cluster and separate clusters would not share a common pattern-cell between them. The conditions and an analytic method to find such an overlap are developed. A simple, intuitive, nonparametric clustering procedure, based on such overlapping pattern-cells is presented. It may be classified as an agglomerative, hierarchical, linkage-type clustering procedure. The algorithm is fast, requires low storage and can identify irregular clusters. Two extensions of the algorithm, to separate overlapping clusters and to estimate the nature of pattern distributions in the sample space, are also indicated.

Promoting the European Union : Attitudinal stance adjectives in three genres of EU communication to the public

M��let f��r Pro Gradu-avhandlingen ��r att unders��ka hur Europeiska unionen (EU) marknadsf��rs genom anv��ndningen av v��rderande adjektiv i tre genrer av skriftlig kommunikation fr��n EU till medlemsstaternas medborgare. Unders��kningen ��r inriktad p�� tre forskningsfr��gor: hur marknadsf��ringen av EU syns i anv��ndningen av v��rderande adjektiv i de tre genrerna, vilka de centrala skillnaderna mellan de tre genrerna ��r g��llande anv��ndningen av v��rderande adjektiv, samt p�� vilket s��tt texterna uppfyller sitt kommunikativa syfte, n��mligen att informera allm��nheten om EU:s verksamhet och marknadsf��ra EU som en giltig och handlingskraftig union. Den teoretiska ramen f��r unders��kningen grundar sig p�� genreanalys, kommunikationsteori och teorier om hur f��rfattarens v��rdering (stance) syns i texter. Skillnaden mellan genre, texttyp och register diskuteras, och teoridelen redog��r ��ven f��r begreppet diskurssamfund, dvs. den grupp personer som i ett yrkesm��ssigt eller institutionellt sammanhang producerar och anv��nder sig av en genre enligt dess kommunikativa konventioner. Materialet behandlas ��ven utg��ende fr��n Egon Werlichs indelning av texttyper i deskriptiva, narrativa, exposit��ra, argumentativa och instruktiva texter. Materialet best��r av tre delar som representerar var sin genre: informationsbroschyrer, pressmeddelanden och den Allm��nna rapporten om Europeiska unionens verksamhet, som utges av EU varje ��r. Storleken p�� varje del av materialet varierar mellan 20 000 - 30 000 ord. Materialet har valts p�� basis av de teman texterna behandlar, och kriterierna f��r urvalet ��r bl.a. att texterna behandlar ��mnen som har anknytning till medborgarnas vardag, att de ��r riktade till allm��nheten, och att de finns tillg��ngliga p�� Internet. Unders��kningen ��r genomf��rd som en kvalitativ genreanalys. Materialet analyseras f��rst utg��ende fr��n kontexten och det samh��lleliga sammanhanget enligt Vijay K. Bhatias metodik f��r analys av obekanta genrer. Det kommunikativa syftet, f��rfattaren och den tillt��nkta l��sarkretsen, dvs. m��lgruppen f��r kommunikationen, fastst��lls. V��rderande adjektiv som uttrycker f��rfattarens h��llning har plockats ur texten manuellt och med hj��lp av konkordansprogrammet AntConc, och placerats i 16 kategorier enligt de v��rden de uttrycker. Varje genre analyseras sedan spr��kligt med utg��ngspunkt i adjektivlistorna, varefter resultaten j��mf��rs med varandra. Unders��kningen visar att pressmeddelandena inneh��ller det st��rsta antalet v��rderande adjektiv, medan informationsbroschyrerna inneh��ller det minsta antalet v��rderande adjektiv. Den Allm��nna rapporten om Europeiska unionens verksamhet inneh��ller delar med t��tt f��rekommande v��rderande adjektiv, i synnerhet i stycken som behandlar mer kontroversiella ��mnen. I alla tre genrer sammanfaller ett h��gt antal v��rderande adjektiv med argumentativ text, och argumentativ text f��rekommer fr��mst d�� ��mnet som diskuteras r��r sig p�� en mer abstrakt niv��, t.ex. om EU:s v��rderingar och grundl��ggande principer, eller d�� texten behandlar s��dan politik som delar allm��nhetens uppfattning. F��r EU utg��r alla tre genrer viktiga kanaler f��r kommunikationen till medlemsstaternas medborgare, och EU kan genom sitt informationsmaterial och sina officiella publikationer informera om, f��rklara och marknadsf��ra sin verksamhet p�� ett s��tt som avser att uppr��tth��lla och f��rb��ttra EU:s image. Utarbetandet av l��mpliga texter ��r ��nd�� kr��vande p�� grund av den heterogena m��lgruppen, och det ��r en utmaning i sig att f�� fram r��tt budskap bland det stora utbudet information som finns tillg��ngligt p�� Internet.