Executive and Broad-Based Stock Options: Evidence from U.S. Panel Data

Abstract

This paper examines the productivity effect of the adoption of executive and broad-based stock options. The findings include a positive impact on productivity after the introduction of both executive and broad-based stock options. This productivity effect is maintained over a five-year period after adoption for executive plans but the effect diminishes for broad-based plans. We interpret these findings as evidence of stock option usage as being a benefit to organizations; however, firms may need to distribute broad-based stock options in the same way as for executive plans to maintain the impact.

Keywords: Executive, broad-based, stock option