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The Timing of Option Repricing


  • Sandra Renfro Callaghan,

  • P. Jane Saly,

  • Chandra Subramaniam

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    • Callaghan is at Texas Christian University, Saly is at the University of St. Thomas, and Subramaniam is at the University of Texas at Arlington. The authors would like to thank the anonymous referee, Richard Green (the editor), Chris Barry, Bob Vigeland, Don Nichols, Mark Vargus, David Yermack, and workshop participants at Université Laval, University of British Columbia, Claremont McKenna College, American University, 2001 Annual Meeting of the Accounting Association of Australia and New Zealand, 2001 Annual Meeting of the American Accounting Association, and the 2001 Annual Meeting of the Financial Management Association. We also thank Cristian Danciu and Scott Richardson for research assistance. Professor Callaghan gratefully acknowledges financial support from the Charles Tandy American Enterprise Center and the Luther King Capital Management Center for Financial Studies at Texas Christian University. All errors are our own.


We investigate whether executive stock option repricings are systematically timed to coincide with favorable movements in the company's stock price. For a sample of 236 repricing events, we observe sharp increases in stock price in the 20-day period following the repricing date. In addition, repricing dates tend to either precede the release of good news or follow the release of bad news in the quarterly earnings announcements. Since information about stock option repricing is not generally released to the public around the repricing date, these findings suggest that CEOs opportunistically manage the timing of the option repricing date.