This paper investigates the potential disadvantages of the secondary markets for executive stock options (ESOs). The benefits of such markets are evident, but they might also have negative effects for shareholders. Executives might, for example, use inside information to time their ESO selling....

This study examines the managers' motives for cashing their ESOs when they are able to sell them. Investigating the managers' selling behavior instead of their exercising behavior is advantageous, since when selling their ESOs, managers do not sacrifice the time value component of the ESO as in...