Executive stock options, informative stock prices and innovation

Prior studies have not reasonably explained why executive stock options (ESOs) encourage innovation through vega rather than delta. This study re-examines the relationship among vega, delta and performance when prices are informative. The findings indicate that informative amplify effect on encouraging executives to improve but alleviate traditional positive of innovation. Moreover, informative, deep-in-the-money reduce innovation, whereas state control, independent directors manager director shareholding enhance (reduce) (vega) results hold after conducting robustness tests.