Journal article
Do Stock Options Overcome Managerial Risk Aversion? Evidence from Exercises of Executive Stock Options
Management science, Vol.63(9), pp.3057-3071
09/01/2017
DOI: 10.1287/mnsc.2016.2485
Abstract
We report that the probability that executives exercise options early decreases with the volatility of the underlying stock return. We interpret this to mean that executives' subjective option value increases with volatility and that option grants increase executives' risk appetite. Further decomposition reveals that the results are most pronounced for idiosyncratic volatility, consistent with our conjecture that executives believe they can better predict or influence the resolution of idiosyncratic uncertainty than systematic uncertainty and, thus, favor the former.
Details
- Title: Subtitle
- Do Stock Options Overcome Managerial Risk Aversion? Evidence from Exercises of Executive Stock Options
- Creators
- Randall A. Heron - Indiana UniversityErik Lie - Univ Iowa, Henry B Tippie Coll Business, Iowa City, IA 52242 USA
- Resource Type
- Journal article
- Publication Details
- Management science, Vol.63(9), pp.3057-3071
- DOI
- 10.1287/mnsc.2016.2485
- ISSN
- 0025-1909
- eISSN
- 1526-5501
- Publisher
- Informs
- Number of pages
- 15
- Language
- English
- Date published
- 09/01/2017
- Academic Unit
- Finance
- Record Identifier
- 9984380403002771
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