It is often argued that Black-Scholes (1973) values overstate the subjective value of stock options granted to risk-averse and under-diversified executives. We construct a "representative" Swiss executive and extend the certainty-equivalence approach presented by Hall and Murphy (2002) to assess...

Using a panel of 425 European firms over the period from 1990 to 2005, we revisit Welch's (2004) finding that stock returns are the primary determinant of capital structure changes and that the corporate motives for issuing activities remain largely unexplained. We document that about half of...