Why do some firms give stock options to all employees?
Subtitle: an empirical examination of alternative theories
By: Paul Oyer, Scott Schaefer.
Contributors: Schaefer, Scott.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10222; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10222.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Employee stock options
Description: "Many firms issue stock options to all employees.  We consider three potential economic justifications for this practice: providing incentives to employees, inducing employees to sort, and helping firms retain employees.  We gather data on firms' stock option grants to middle managers from three distinct sources, and use two methods to assess which theories appear to explain observed granting behavior.  First, we directly calibrate models of incentives, sorting and retention, and ask whether observed magnitudes of option grants are consistent with each potential explanation.  Second, we conduct a cross-sectional regression analysis of firms' option-granting choices.  We reject an incentives-based explanation for broad-based stock option plans, and conclude that sorting and retention explanations appear consistent with the data"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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Mode of access: World Wide Web.