Incentive Efficiency of Stock versus Options

Gerald A. Feltham () and Martin G. H. Wu ()
Additional contact information
Gerald A. Feltham: University of British Columbia
Martin G. H. Wu: University of British Columbia

Review of Accounting Studies, 2001, vol. 6, issue 1, No 2, 7-28

Abstract: Abstract This paper examines the relative incentive costs of using stockversus options in management incentive contracts that use market priceas the performance measure. We establish that if the manager'seffort has little or no effect on a firm's operating risk, thenthe cost of incentive risk is less using stock rather than options.However, this result is reversed if the manager's effort has asignificant impact on the firm's operating risk.

Keywords: Incentive efficiency; employee stock options; executive compensation (search for similar items in EconPapers)
Date: 2001
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1023/A:1011377902967 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:reaccs:v:6:y:2001:i:1:d:10.1023_a:1011377902967

Ordering information: This journal article can be ordered from
http://www.springer.com/accounting/journal/11142

DOI: 10.1023/A:1011377902967

Access Statistics for this article

Review of Accounting Studies is currently edited by Paul Fischer

More articles in Review of Accounting Studies from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().