The John M. Olin Center

Paper Abstract

566. Lucian A. Bebchuk, Yaniv Grinstein & Urs Peyer, Lucky CEOs, 11/2006; subsequently published in The Journal of Finance, Vol. LXV, No. 6, December 2010, 2363-2401.

Abstract: We study the relation between corporate governance and opportunistic option grant manipulation. Our methodology for studying grant manipulation focuses on how grant date prices rank within the price distribution of the grant month. Investigating the incidence of "lucky grants" -- defined as grants given at the lowest price of the month -- we estimate that about 1150 lucky grants resulted from manipulation and that 12% of firms provided one or more lucky grant due to manipulation during the period 1996-2005. Examining the circumstances and consequences of lucky grants we find:

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