NYU Working Paper No.

There are 2 versions of this paper. In theory, hedging restrictions faced by managers make executive stock options more difficult to value than ordinary options, because they imply that exercise policies of managers depend on their preferences and endowments.

Using data on option exercises from 40 firms, this paper shows that a simple extension of the ordinary American option model which introduces random, exogenous exercise and forfeiture predicts actual exercise times and payoffs just as well as an elaborate utility-maximizing model that explicitly accounts for the nontransferability of options. The simpler model could therefore be more useful than the preference-based model for valuing executive options in practice.

Executive stock options, Exercise policy, Option valiation, Nontranferable option, Utility maximization. Stern School of Business 44 West 4th Street New York, NY United States Phone Fax.

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Stock Options, Restricted Stock, Phantom Stock, Stock Appreciation Rights (SARs), and Employee Stock Purchase Plans (ESPPs)

Stock Options for Undiversified Executives. By Brian Hall and Kevin Murphy. Cookies are used by this site. To decline or learn more, visit our Cookies page. This page was processed by apollo4 in 0. Your Account User Home Personal Info Affiliations Subscriptions My Papers My Briefcase Sign out.

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Carpenter New York University NYU - Department of Finance. The Exercise and Valuation of Executive Stock Options NYU Working Paper No. You are currently viewing this paper.

Abstract In theory, hedging restrictions faced by managers make executive stock options more difficult to value than ordinary options, because they imply that exercise policies of managers depend on their preferences and endowments. Carpenter Contact Author New York University NYU - Department of Finance email Stern School of Business 44 West 4th Street New York, NY United States Phone Fax.

Download this Paper Open PDF in Browser. Recommended Papers Executive Compensation By Kevin Murphy Are CEOs Really Paid Like Bureaucrats?

By Brian Hall and Jeffrey Liebman Are CEOS Really Paid Like Bureaucrats? By Brian Hall and Jeffrey Liebman Do Corporations Award CEO Stock Options Effectively By David Yermack The Other Side of the Tradeoff: The Impact of Risk on Executive Compensation By Rajesh Aggarwal and Andrew Samwick Good Timing: CEO Stock Option Awards and Company News Announcements By David Yermack Good Timing: CEO Stock Option Awards and Company News Announcements By David Yermack The Use of Equity Grants to Manage Optimal Equity Incentive Levels By John Core and Wayne Guay The Other Side of the Tradeoff: Eastern, Monday - Friday.

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The Exercise and Valuation of Executive Stock Options by Jennifer N. Carpenter :: SSRN

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