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How do Executives Exercise Stock Options?

By Daniel Klein and Ernst Maug


We analyze a large data set of stock option exercises for a large data set of almost 200,000 option packages for more than 16,000 US top executives and analyze their motivations for the early exercise of their stock options. We estimate a hazard model to identify the main variables that influence executives' timing decisions and nd that behavioral factors (e.g., trends in past stock prices), institutional factors (vesting dates, grant dates, blackout periods) and inside information strongly in uence the timing of stock option exercises. By contrast, we find little support for the in uence of variables proposed by utility-based models

Topics: Stock options, exercises, executive compensation JEL classi cations, G30, M52
Year: 2008
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