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James Brickley, Sanjai Bhagat, Ronald Lease (1985)
The impact of long-range managerial compensation plans on shareholder wealthJournal of Accounting and Economics, 7
James MacBeth, L. Merville (1980)
Tests of the Black-Scholes and Cox Call Option Valuation ModelsJournal of Finance, 35
H. Tehranian, James Waegelein (1985)
MARKET REACTION TO SHORT-TERM EXECUTIVE COMPENSATION PLAN ADOPTION*Journal of Accounting and Economics, 7
Anup Agrawal, G. Mandelker (1987)
Managerial Incentives and Corporate Investment and Financing DecisionsJournal of Finance, 42
A. Stuart, W. Conover (1972)
Practical Nonparametric Statistics
Douglas Skinner (1989)
Options markets and stock return volatilityJournal of Financial Economics, 23
P. Beck, Thomas Zorn (1982)
Managerial Incentives in a Stock Market EconomyJournal of Finance, 37
D. Larcker (1983)
The association between performance plan adoption and corporate capital investmentJournal of Accounting and Economics, 5
D. Dennis, John Mcconnell (1986)
Corporate mergers and security returnsJournal of Financial Economics, 16
Peter Dodd, Jerold Warner (1983)
On corporate governance: A study of proxy contestsJournal of Financial Economics, 11
Steven Manaster, G. Koehler (1982)
The Calculation of Implied Variances from the Black‐Scholes Model: A NoteJournal of Finance, 37
Sanjai Bhagat, James Brickley (1984)
Cumulative Voting: The Value of Minority Shareholder Voting RightsThe Journal of Law and Economics, 27
Y. Amihud, B. Lev (1981)
Risk Reduction as a Managerial Motive for Conglomerate MergersThe Bell Journal of Economics, 12
H. DeAngelo, Edward Rice (1983)
Antitakeover charter amendments and stockholder wealthJournal of Financial Economics, 11
F. Black, Myron Scholes (1973)
The Pricing of Options and Corporate LiabilitiesJournal of Political Economy, 81
Michael Jensen, W. Meckling (1976)
Theory of the Firm
DeAngelo DeAngelo, Edward Edward (1983)
Anti‐takeover amendments and shareholder wealthJournal of Financial Economics, 11
R. Haugen, Lemma Senbet (1981)
Resolving the Agency Problems of External Capital through OptionsJournal of Finance, 36
Stephen Brown, Jerold Warner (1985)
Using daily stock returns: The case of event studiesJournal of Financial Economics, 14
Merton Merton (1974)
On the pricing of corporate debt: The risk structure of interest ratesJournal of Finance, 29
Jensen Jensen, William William (1976)
Theory of the firm: Managerial behavior, agency costs, and ownership structureJournal of Financial Economics, 3
Kevin Murphy (1985)
Corporate performance and managerial remuneration: An empirical analysisJournal of Accounting and Economics, 7
R. Masson (1971)
Executive Motivations, Earnings, and Consequent Equity PerformanceJournal of Political Economy, 79
H. Tehranian, N. Travlos, James Waegelein (1987)
The Effect of Long-term Performance Plans on Corporate Sell-Off-Induced Abnormal ReturnsJournal of Finance, 42
Richard Lambert, D. Larcker (1985)
Golden parachutes, executive decision-making, and shareholder wealthJournal of Accounting and Economics, 7
ABSTRACT Executive stock option plans have asymmetric payoffs that could induce managers to take on more risk. Evidence from traded call options and stock return data supports this notion. Implicit share price variance, computed from the Black‐Scholes option pricing model, and stock return variance increase after the approval of an executive stock option plan. The event is accompanied by a significant positive stock and a negative bond market reaction. This evidence is consistent with the notion that executive stock options may induce a wealth transfer from bondholders to stockholders.
The Journal of Finance – Wiley
Published: Jun 1, 1990
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