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Article: 1 Should executive stock options be abandoned?
- Article from:
- Australian Journal of Management
- Article date:
- December 1, 2006
- Author:
CopyrightCOPYRIGHT 2006 Australian Graduate School Of Management. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Abstract:
Recent corporate scandals around the world have led many to single out executive stock options as one of the main culprits. More corporations are abandoning stock options and reverting to restricted stock. This paper argues that such a change is not entirely justifiable. We first provide a critical review of the pros and cons of executive stock options. We then compare option-based contracts with stock-based contracts using a simple principal-agent model with moral hazard. In a general environment without restrictions on preferences or technologies, option-based contracts are shown to weakly dominate stock-based contracts. The weak dominance relation ...
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Article: Stock options: The key to higher shareholder value
Hoosier Banker;
August 1, 1997 ;
700+ words
... ... issuing stock options. Stock options can motivate key executives ... shareholders. Possessing stock options will tremendously increase ... we read in the Wall Street Journal and other publications about enormous stock options being granted to the ...
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