The Information Contained in the Exercise of Executive Stock Options
AbstractThis paper investigates whether insiders use private information in their decision to exercise executive stock options. Consistent with existing research, exercises overall do not yield subsequent abnormal returns. Categorising exercises by the proportion of stock sold at exercise yields a marked and significant difference in subsequent performance between those accompanied by a â€˜highâ€™ and â€˜lowâ€™ sale proportion respectively. Further, near-the-money exercises produce negative abnormal returns, consistent with such exercises being expensive. The disparity in US and UK executivesâ€™ exercise behaviour may be related to the extent to which executive remuneration is linked to shareholder wealth, highlighting the difficulties associated with designing effective remuneration packages for executives
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2006 with number 193.
Date of creation: 04 Jul 2006
Date of revision:
executive stock options; insider trading; event studies;
Find related papers by JEL classification:
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.