EconPapers    
Economics at your fingertips  
 

Information, Insider Trading, Executive Reload Stock Options, Incentives, and Regulation

David Colwell (), David Feldman (), Wei Hu () and Monique Pontier ()
Additional contact information
David Colwell: UNSW Business School - UNSW - University of New South Wales [Sydney]
David Feldman: UNSW Business School - UNSW - University of New South Wales [Sydney]
Wei Hu: Curtin University
Monique Pontier: IMT - Institut de Mathématiques de Toulouse UMR5219 - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INSA Toulouse - Institut National des Sciences Appliquées - Toulouse - INSA - Institut National des Sciences Appliquées - UT - Université de Toulouse - UT2J - Université Toulouse - Jean Jaurès - UT - Université de Toulouse - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse - CNRS - Centre National de la Recherche Scientifique

Working Papers from HAL

Abstract: We introduce a theoretical model of executives with insider information (insider-executives) granted incentivizing executive stock options (ESO). We show that while insider-executives optimize their wealth, using their insider information nullies ESO incentives, misaligning their and shareholders' interests. We oer realigning methods: granting insider-executives reload stock options (RSO) and imposing blackout trading periods (blackouts). Eective blackouts keep insider-executives incentivized without being overly restrictive, i.e., without reducing their welfare below that of outsiders. We introduce RSO pricing for insider-executives and oer policy implications: reestablishing the currently out-of-favor RSO, and allowing rms, not regulators, to set blackout periods on securities they issue.

Keywords: Executive Stock Options; Insider Information; Constrained Portfolio Optimization; Non-Hedgeable; Non-Transferable; Reload; Enlarged Filtration (search for similar items in EconPapers)
Date: 2023-06-05
New Economics Papers: this item is included in nep-mac and nep-mst
Note: View the original document on HAL open archive server: https://hal.science/hal-04116818
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://hal.science/hal-04116818/document (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:hal:wpaper:hal-04116818

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2024-02-19
Handle: RePEc:hal:wpaper:hal-04116818