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How Do Quasi-Random Option Grants Affect CEO Risk-Taking?

Shue, Kelly - 2019

We examine how an increase in stock option grants affects CEO risk-taking. The overall net effect of option grants is theoretically ambiguous for risk-averse CEOs. To overcome the endogeneity of option grants, we exploit institutional features of multi-year compensation plans, which generate two...

Persistent link: https://www.econbiz.de/10012902373

Incentive Pay and Bank Risk-Taking : Evidence from Austrian, German, and Swiss Banks

Efing, Matthias; Hau, Harald; Kampkötter, Patrick; … - 2021

We use payroll data on 1.2 million bank employee years in the Austrian, German, and Swiss banking sector to identify … document an economically significant correlation of incentive pay with both the level and volatility of bank trading income … share in the capital markets divisions with the strength of incentive pay in unrelated bank divisions like retail banking …

Persistent link: https://www.econbiz.de/10013224886

Efficient Bailouts?

Bianchi, Javier - 2012

We develop a quantitative equilibrium model of financial crises to assess the interaction between ex-post interventions in credit markets and the buildup of risk ex ante. During a systemic crisis, bailouts relax balance sheet constraints and mitigate the severity of the recession. Ex ante, the...

Persistent link: https://www.econbiz.de/10013096860

Employee Stock Options, Corporate Taxes and Debt Policy

Graham, John R. - 2012

We find that employee stock option deductions lead to large aggregate tax savings for Nasdaq 100 and Samp;P 100 firms and also affect corporate marginal tax rates. For Nasdaq firms, the median marginal tax rate is 31 percent when option deductions are ignored but falls to 5 percent when one...

Persistent link: https://www.econbiz.de/10012755891

Cephalon, Inc. Taking Risk Management Theory Seriously

Chacko, George - 2012

We study a firm that justifies its novel use of equity derivatives as a cash-flow hedging strategy. Our purpose is to understand the challenge of translating risk management theory into managerial action. Cephalon Inc., a biotech firm, bought a large block of call options on its own stock. If...

Persistent link: https://www.econbiz.de/10012755991

Strategic News Releases in Equity Vesting Months

Edmans, Alex - 2014

We show that CEOs strategically time corporate news releases to coincide with months in which their equity vests. These vesting months are determined by equity grants made several years prior, and thus unlikely driven by the current information environment. CEOs reallocate news into vesting...

Persistent link: https://www.econbiz.de/10013047405

The Response of Deferred Executive Compensation to Changes in Tax Rates

Gorry, Aspen - 2015

Given the increasing use of stock options in executive compensation, we examine how taxes influence the choice of compensation and document that income deferral is an important margin of adjustment in response to tax rate changes. To account for this option in the empirical analysis, we explore...

Persistent link: https://www.econbiz.de/10013015981

Executive Compensation : A New View from a Long-Term Perspective, 1936-2005

Frydman, Carola - 2010

We analyze the long-run trends in executive compensation using a new panel dataset of top executives in large publicly-held firms from 1936 to 2005, collected from corporate reports. This historic perspective reveals several surprising new facts that conflict with inferences based only on data...

Persistent link: https://www.econbiz.de/10012759098

The Value of Stock Options to Non-Executive Employees

Hallock, Kevin F. - 2010

This study empirically investigates the value employees place on stock options using information from the option exercise behavior of individuals. Employees hold options for another period if the value from holding them and reserving the right to exercise them later is higher than the value of...

Persistent link: https://www.econbiz.de/10012761772

The Trouble with Stock Options

Hall, Brian J. - 2010

The trouble with options is that too many options are granted to too many people. Most options are granted below the top-executive level, and options are often an inefficient way to attract, retain and motivate executives and (especially) lower-level employees. Why, then, are options so...

Persistent link: https://www.econbiz.de/10012762807