Information Distribution within Firms: Evidence from Stock Option Exercises
52 Pages Posted: 22 Jan 2001
Date Written: June 2001
We examine the stock option exercise decisions of over 50,000 employees at seven corporations to provide evidence on the distribution of price-relevant non-public information among employees. When option exercise (adjusted for other factors affecting exercise) is low, stock returns in the coming six months are 10% higher than when option exercise is high. The exercise decisions of relatively junior employees contain at least as much price-relevant information as the exercise decisions of more senior employees.
Keywords: accounting, compensation, disclosure, regulation, securities
JEL Classification: D82, G28, J33, K22
Suggested Citation: Suggested Citation