The Timing of Share Repurchases to Achieve Private Benefits from Stock Options

This thesis investigates the strategic use and timing of share repurchases by CEOs for achieving private benefits. Specifically, it studies the relation between stock repurchases and stock option granting and exercise decision in different time periods. I find that share repurchases occur more three months after the stock option grant date and less three months before. Subsequently, I find that share repurchases occur less three months after the stock option exercise date and more three months before. The relation between the repurchase activity and stock option grants is stronger for larger stock option grants but weaker for vested stock options. Finally, I calculate cumulative abnormal returns within different individual periods and make comparisons to find the most valuable timing decision. My findings point out that it is more profitable to repurchase around the stock option grant date as I find higher cumulative abnormal returns compared to the period around the exercise date.