Stock option contract design and managerial fraud

Rudy Santore () and Martin Tackie ()
Additional contact information
Rudy Santore: University of Tennessee
Martin Tackie: Concordia College

Economics Bulletin, 2013, vol. 33, issue 2, 1283-1289

Abstract: Stock option contracts provide managers with dual incentives, motivating both effort and fraud. We show that although there exists an infinity of stock option contracts that induce a given level of effort, no contract behaviorally dominates another in the sense that it induces relatively greater effort and relatively less fraud. We also characterize the schedule of implementable effort-fraud pairs.

Keywords: Corporate governance; stock options; incentives; contract design; fraud (search for similar items in EconPapers)
JEL-codes: G3 L2 (search for similar items in EconPapers)
Date: 2013-05-24
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I2-P120.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-13-00143

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().