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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

Cross-Sectional Uncertainty and the Business Cycle : Evidence from 40 Years of Options Data

Dew-Becker, Ian; Giglio, Stefano - 2022

This paper presents a novel and unique measure of cross-sectional uncertainty constructed from stock options on individual firms. Cross-sectional uncertainty varied little between 1980 and 1995, and subsequently had three distinct peaks -- during the tech boom, the financial crisis, and the...

Persistent link: https://www.econbiz.de/10013492635

The Joint Cross Section of Stocks and Options

An, Byeong-Je - 2013

Stocks with large increases in call implied volatilities over the previous month tend to have high future returns while stocks with large increases in put implied volatilities over the previous month tend to have low future returns. Sorting stocks ranked into decile portfolios by past call...

Persistent link: https://www.econbiz.de/10013073570

Equity Vesting and Managerial Myopia

Edmans, Alex - 2014

This paper links the impending vesting of CEO equity to reductions in real investment. Existing studies measure the manager's short-term concerns using the sensitivity of his equity to the stock price. However, in myopia theories, the driver of short-termism is not the magnitude of incentives...

Persistent link: https://www.econbiz.de/10013063030

Stock Option Exercise and Gift Exchange Relationships : Evidence for a Large Us Company

Cappelli, Peter - 2011

We investigate gift exchange relationships in real jobs, making use of a field quasi-experiment associated with the exercise of stock options for roughly 4500 managers in a large public company. In this company, option grants are set equally for all employees within occupational categories, and...

Persistent link: https://www.econbiz.de/10013129185

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

Why Do Some Firms Give Stock Options to All Employees? : An Empirical Examination of Alternative Theories

Oyer, Paul E. - 2004

Many firms issue stock options to all employees. We consider three potential economic justifications for this practice: providing incentives to employees, inducing employees to sort, and helping firms retain employees. We gather data on firms' stock option grants to middle managers from three...

Persistent link: https://www.econbiz.de/10012785955

Compensating Employees Below the Executive Ranks : A Comparison of Options, Restricted Stock, and Cash

Oyer, Paul E. - 2004

Using a detailed data set of employee stock option grants, we compare observed stock-option-based pay plans to hypothetical cash-only or restricted-stock-based plans. We make a variety of assumptions regarding the possible benefits of options relative to cash or stock, and then use observed...

Persistent link: https://www.econbiz.de/10012785956