Corporate Meltdowns Caused by Compensatory Stock Options

Thanks for the post Tom,

I love academic research.  In fact There are some interesting postings on the ECE that provide quite different perspectives from this study.

http://equitycompensationexperts.groupsite.com/discussion/topic/show/302394

http://equitycompensationexperts.groupsite.com/discussion/topic/show/429916

 The following is a conclusion from a third study:

Conclusion

Stock option plans have come under increased public
criticism for encouraging executives to take excessive risks. This paper shows
that stock option grants are part of an optimal pay arrangement not despite but
because they make executives more prone to experiment. Executives who benefit
from adopting innovative and risky investment opportunities have greater
incentives to search for those opportunities in the first place. Thus, stock
option grants are an effective tool to induce executives to spend time and
effort generating new and innovative investment ideas.