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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
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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
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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
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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
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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
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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
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Executive Compensation in America : Optimal Contracting or Extraction of Rents?
Bebchuk, Lucian A. - 2010
This paper develops an account of the role and significance of rent extraction in executive compensation. Under the optimal contracting view of executive compensation, which has dominated academic research on the subject, pay arrangements are set by a board of directors that aims to maximize...
Persistent link: https://www.econbiz.de/10012763080
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Optimal Exercise Prices for Executive Stock Options
Hall, Brian J. - 2010
Although exercise prices for executive stock options can be set either below or above the grant-date market price, in practice virtually all options are granted at the money. We offer an economic rationale for this apparent puzzle, by showing that pay-to-performance incentives for risk-averse...
Persistent link: https://www.econbiz.de/10012763310
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The Pay to Performance Incentives of Executive Stock Options
Hall, Brian J. - 2010
Detailed data about stock option contracts are used to measure and analyze the pay to performance incentives of executive stock options. Two main issues are addressed. The first is the pay to performance incentives created by the revaluation of stock option holdings. The findings suggest that if...
Persistent link: https://www.econbiz.de/10012763587
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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