Employee Stock Options: A Standard Setting Saga
نویسندگان
چکیده
منابع مشابه
Heterogeneous beliefs and employee stock options;
This paper uses a market valuation model to explore why firms grant employee stock options. When insider managers and outside investors have different opinions about the future prospects of the firm, employee stock options can be used to capture future investor overvaluation and to save employee compensation costs. Options can enhance the stock value for existing shareholders if the difference ...
متن کاملMarket Valuation and Employee Stock Options
This paper investigates a market-valuation-based hypothesis for employee stock options (ESOs). It examines how market valuation has affected the decision to grant ESOs, the amount of options granted, and the distribution of options among executives and rankand-file employees. I find strong empirical evidence that firms with high market valuation and high probability of future overvaluation are ...
متن کاملAnalytic Pricing of Employee Stock Options∗†
We introduce a model that captures the main properties that characterize employee stock options (ESO), in particular, the likelihood of early voluntary exercise and the obligation to exercise immediately if the employee leaves the firm, except if this happens before options are vested, in which case the options are forfeited. We derive an analytic formula for the price of the ESO and analyze it...
متن کاملEmployee Stock Options Incentive Effects: a Cpt-based Model
This paper examines the incentives from stock options for loss-averse employees subject to probability weighting. Employing the certainty equivalence principle, I built on insights from Cumulative Prospect Theory (CPT) to derive a continuous time model to value options from the perspective of a representative employee. Consistent with a growing body of empirical and experimental studies, the mo...
متن کاملOn the Accounting Valuation of Employee Stock Options
In its Exposure Draft, "Accounting for Stock-based Compensation," FASB proposes that either the Black-Scholes or binomial option pricing model be used to expense employee stock options, and that the value of these options be measured on their grant date with typically modest ex-post adjustment. This brings the accounting profession squarely up against the Scylla of imposing too narrow a set rul...
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ژورنال
عنوان ژورنال: Journal of Business Case Studies (JBCS)
سال: 2012
ISSN: 2157-8826,1555-3353
DOI: 10.19030/jbcs.v8i3.6984