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The Effects of endowment and loss aversion in managerial stock option valuation

Assuming a positive influence of stock price volatility on stock option value, incentive alignment proponents argue that stock option compensation encourages managerial risk seeking and, thus, aligns managers' and shareholders' risk preferences. Our findings show that stock option holders overvalue unexercisable options relative to options being offered and to normative (e. G. , Black-Scholes) valuations. Further, the influence of stock price volatility on holders' subjective valuations depends on stock price trend. In sum, results suggest that during stock option valuation, managers draw on heuristics that financial options theory and models fail to capture. We discuss implications for compensation design and research.Printed Journal

Ketersediaan

Call NumberLocationAvailable
PSB lt.dasar - Pascasarjana1
Penerbit Academy of Management.,
Edisi -
Subjek Stock options
Management
Risk
Valuation
Executives
Stocks
Market value
Market prices
Incentivenes in industry
Option value
ISBN/ISSN 14273
Klasifikasi -
Deskripsi Fisik -
Info Detail Spesifik -
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