In contrast to the trend of research investigating why firms decide to release earnings forecasts to pre-empt any expected change in earnings, our study investigates how firms manage their earnings forecast strategy once they have decided to release earnings forecasts. Using a sample of 350...

This paper examines two questions. First, whether and if so, to what extent real compensation growth has been systematically associated with labour productivity growth in the past five decades, once other factors determining real compensation growth have been taken into account. And secondly,...

While in the US stock-based incentives are commonly used since the 50s of the last century, in Germany they were invented only some ten years ago. Even in 1996 firms faced considerable regulatory difficulties when willing to grant such incentives. In the meantime the legal environment has...

This paper examines the effect of using different option valuation models to calculatethe fair market value of Executive Stock Options (ESOs) granted to executivedirectors of UK firms. Our key objective is to demonstrate empirically that somecompanies will have greater incentive and benefit from...

We value UK executive stock options (ESOs) as American options that areawarded conditional on the probability of the holders achieving some performancecriteria. Unlike the standard Black and Scholes (BS) model, which is universally usedboth in the literature and practice, this provides a more...

We develop a continuous-time real options pricing model to study managers’incentives to cheat in the presence of equity-based compensation policies.We show that managers’ incentives to cheat are strongly influenced by theefficiency of the justice. Our model’s main result is that managers...

During the last decade, a surprisingly high percentage of U.S. companies has fulfilled or beatenanalysts´ earnings per share forecasts. One of the most frequently cited reasons for this growingtendency is a change in the nature of U.S. executive compensation structure. As stock options...

In this article the problem of the American option valuation in a L´vy process setting is analyzed. The perpetual case is first considered. Without possible discontinuities (i.e. with negative jumps inthe call case), known results concerning the currency option value as well as the exercise...

In this article, we describe the various sorts of American Parisian options and propose valuation formulae. Although there is no closed-form valuation for these products in the non perpetual case, we have been able to reformulate their price as a function of the exercise frontier. In the...

Using a VAR model of the American economy from 1984 to 2003, we find that, contrary to official claims, the Federal Reserve does not target inflation or react to inflation signals." Rather, the Fed reacts to the very real" signal sent by unemployment, in a way that suggests that a baseless fear...