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Stock options and managers’ incentives to cheat


Chesney, Marc; Gibson, Rajna (2008). Stock options and managers’ incentives to cheat. Review of Derivatives Research, 11(1-2):41-59.

Abstract

This paper develops a continuous-time real options’ pricing model to study managers’ incentives to cheat in the presence of equity-based compensation plans. It shows that managers’ incentives to cheat are strongly influenced by the efficiency of the justice. The model’s main result is that managers have greater incentives to commit fraudulent actions under stock options than under common stocks based compensation plans.

Abstract

This paper develops a continuous-time real options’ pricing model to study managers’ incentives to cheat in the presence of equity-based compensation plans. It shows that managers’ incentives to cheat are strongly influenced by the efficiency of the justice. The model’s main result is that managers have greater incentives to commit fraudulent actions under stock options than under common stocks based compensation plans.

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Additional indexing

Item Type:Journal Article, refereed, further contribution
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:16 March 2008
Deposited On:23 Jan 2009 13:53
Last Modified:06 Dec 2017 17:06
Publisher:Springer
ISSN:1380-6645
Publisher DOI:https://doi.org/10.1007/s11147-008-9023-0

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