CEO Stock Option Exercises : Private Information and Earnings Announcements.

Summary This thesis consists of three chapters. Chapter 1 presents general information on stock options and summarizes the existing literature on stock option grants and exercises. Chapter 2 examines the exercise behavior of executives in the largest French companies. The results provide evidence of the use of private information to exercise options far from expiration. Chapter 3 examines the announcement of annual results and its relationship with the exercise decision of executives' stock options. The results of this chapter indicate that annual earnings are more likely to exceed analysts' forecasts when executives exercise their options close to expiration shortly after the announcements. The probability of positive earnings announcements is also higher when executives exercise their options and resell the resulting shares. The results also show the timing ability of executives. They accelerate earnings announcements when they have to exercise their options close to expiration, especially when they sell the resulting shares. Chapter 3 shows that executives use a higher level of discretionary Accruals when they have to exercise options at expiration.