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Option Exercise (option + exercise)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

The Role of Managerial Stock Option Programs in Governance: Evidence from REIT Stock Repurchases

REAL ESTATE ECONOMICS, Issue 1 2010
Chinmoy Ghosh
This article examines the role of stock option programs and executive holdings of stock options in real estate investment trust (REIT) governance. We study the issue by analyzing how the market reaction to a stock repurchase announcement varies as a function of the individual REIT's governance structure. In particular, we examine how executive and employee stock option holdings influence the market reaction to a firm's announcement of a stock repurchase. Using a sample of REIT repurchase announcements, we find that the market reacts more favorably to announcements by firms where executives have larger option holdings and the chief executive officer is not entrenched. Our results with respect to the roles of stock option holdings of executives and nonexecutives differ from those reported for a cross-section of non-REIT firms. While we find evidence supporting the importance of executive stock options in aligning the incentives of management and reinforcing the positive signaling associated with a repurchase announcement, we find little evidence that the market views REIT repurchases as being used primarily to fund option exercise. We attribute these findings to greater dependence by REIT investors on internal governance mechanisms (such as stock option programs) as a result of regulatory restrictions that limit external monitoring such as hostile takeovers. [source]

Cancellation Strategies in Commercial Real Estate Leasing

REAL ESTATE ECONOMICS, Issue 1 2000
Robert M. Mooradian
In a contractionary corporate environment, lease cancellation strategy becomes an important component of corporate real estate leasing decisions. This paper presents a leasing model in which less well-informed lessors offer leases with alternative lease cancellation options. The model demonstrates that a tenant's choice of cancellation option reveals his private information with respect to the likelihood of option exercise. Tenants who select a lease with a downsizing option are more likely to exercise the option. Given the higher likelihood of option exercise, the model suggests that the downsizing option will be priced higher. We examine a sample of 311 leases, and consistent with the model's prediction, we find that on average leases with a downsizing option have significantly higher contract rent. However, termination and sublet options are not associated with higher rent. The evidence suggests that market uncertainty, private information and adverse selection affect the pricing of alternative cancellation options and the choice of cancellation option. [source]

A note on rational call option exercise

THE JOURNAL OF FUTURES MARKETS, Issue 5 2002
Malin Engström
Using Swedish equity option data, the rationality in the exercise of American call options is analyzed to see how well it complies with the theoretical exercise rules. Although the exercise behavior appears to be rational overall, several cases of both faulty exercise and failure to exercise are found. Almost a third of the early exercised calls are exercised at other times than predicted by theory. Several of these exercise decisions could potentially be explained by transaction costs, indicating that market frictions do affect the exercise behavior. However, over two thirds of the faulty exercises cannot be explained at all. © 2002 Wiley Periodicals, Inc. Jrl Fut Mark 22:471,482, 2002 [source]

Gender-Compensation Differences Among High-Level Executives in the United States

INDUSTRIAL RELATIONS, Issue 3 2010
BULLÓN, FERNANDO MUÑOZ
Bertrand and Hallock (2001: 3) present compelling evidence that female executives in the United States earned 45 percent less total compensation than their male counterparts for 1992,1997. We complement their results by analyzing data over a longer time period and, more importantly, contend that most of the unexplained gender difference in total pay among executives was due to gender differences in the portion of variable pay, in particular a different cash payout from stock option exercises. [source]