Option Compensation and Industry Competition
Neal M. Stoughton and
Kit Pong Wong
Review of Finance, 2009, vol. 13, issue 1, 147-180
Abstract:
Compensation policy has become one of the most important ingredients of corporate governance. In this paper we take a new look at the issue, by contrasting the use of options with that of stock. We do this by integrating the repricing or resetting aspect of options with that of industrial structure. We show that industry competition may play an important role in dictating which form of compensation is optimal. When aggressive competition for key professional staff is an issue, the flexibility of options may actually become a disadvantage and therefore pure stock compensation may survive as an equilibrium. Thus compensation trends may be partly explained by trends in the nature of the competitive environment. Copyright 2009, Oxford University Press.
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (4)
Downloads: (external link)
http://hdl.handle.net/10.1093/rof/rfn001 (application/pdf)
Access to full text is restricted to subscribers.
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:oup:revfin:v:13:y:2009:i:1:p:147-180
Ordering information: This journal article can be ordered from
https://academic.oup.com/journals
Access Statistics for this article
Review of Finance is currently edited by Marcin Kacperczyk
More articles in Review of Finance from European Finance Association Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().