Nber Working Paper Series Why Do Some Firms Give Stock Options to All Employees?: an Empirical Examination of Alternative Theories
نویسندگان
چکیده
Many firms issue stock options to all employees. We consider three potential economic justifications for this practice: providing incentives to employees, inducing employees to sort, and helping firms retain employees. We gather data on firms' stock option grants to middle managers from three distinct sources, and use two methods to assess which theories appear to explain observed granting behavior. First, we directly calibrate models of incentives, sorting and retention, and ask whether observed magnitudes of option grants are consistent with each potential explanation. Second, we conduct a cross-sectional regression analysis of firms' option-granting choices. We reject an incentives-based explanation for broad-based stock option plans, and conclude that sorting and retention explanations appear consistent with the data. Paul Oyer Graduate School of Business Stanford University 518 Memorial Way Stanford, CA 94305-5015 and NBER [email protected] Scott Schaefer Kellogg School of Management Northwestern University 2001 Sheridan Road Evanston, IL 60208-2013 [email protected]
منابع مشابه
Why Do Some Firms Give Stock Options To All Employees?: An Empirical Examination of Alternative Theories∗
Many firms issue stock options to all employees. We consider three potential economic justifications for this practice: providing incentives to employees, inducing employees to sort, and helping firms retain employees. We gather data on firms’ stock option grants to middle managers from three distinct sources, and use two methods to assess which theories appear to explain observed granting beha...
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