The effects of endowment and loss aversion in managerial stock option valuation

• Autores: Cynthia E. Devers, Robert M. Wiseman, R. Michael Holmes Jr.
• Localización: Academy of management journal, ISSN-e 0001-4273, Vol. 50, Nº 1, 2007, págs. 191-208
• Idioma: inglés
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• Dialnet Métricas: 2 Citas
• Resumen

  • Assuming a positive influence of stock price volatility on stock option value, incentive alignment proponents argue that stock option compensation encourages managerial risk seeking and, thus, aligns managers' and shareholders' risk preferences. Our findings show that stock option holders overvalue unexercisable options relative to options being offered and to normative (e. G. , Black-Scholes) valuations. Further, the influence of stock price volatility on holders' subjective valuations depends on stock price trend. In sum, results suggest that during stock option valuation, managers draw on heuristics that financial options theory and models fail to capture. We discuss implications for compensation design and research. [ABSTRACT FROM AUTHOR] Copyright of Academy of Management Journal is the property of Academy of Management and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)