Business, Management and Accounting
4 years ago

CEO stock options driven by agency costs and recruiting, not investment horizon.

Journal of Economic Behavior & Organization
Why do firms adopt CEO stock options? Evidence from the United States
Konstantinos Tzioumis

Paper Summary

Firms in the US introduced CEO stock options between 1994-2004 for reasons related to agency costs and recruiting, not to solve investment horizon issues. The adoption of CEO stock options is influenced by different factors compared to the level of CEO stock option compensation and broad-based stock option incentives. This study supports various theoretical predictions about managerial incentives.

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