Accounting Papers

Document Type

Journal Article

Date of this Version

8-2001

Publication Source

Journal of Financial Economics

Volume

61

Issue

2

Start Page

253

Last Page

287

DOI

10.1016/S0304-405X(01)00062-9

Abstract

We examine determinants of non-executive employee stock option holdings, grants, and exercises for 756 firms during 1994–1997. We find that firms use greater stock option compensation when facing capital requirements and financing constraints. Our results are also consistent with firms using options to attract and retain certain types of employees as well as to create incentives to increase firm value. After controlling for economic determinants and stock returns, option exercises are greater (less) when the firm's stock price hits 52-week highs (lows), which confirms in a broad sample the psychological bias documented by Heath et al. (Quarterly Journal of Economics 114 (1999) 601–628).

Copyright/Permission Statement

© 2001. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0

Keywords

compensation and incentives, financing, employees, non-executives, stock options

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Date Posted: 27 November 2017

This document has been peer reviewed.