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Publication Detail
UPSE PRE 2003-40_2-07: Executive stock options, stock price volatility, and agency costs in the Philippine setting

Firms compensate management with executive stock option plans to mitigate the agency problem arising from conflicts of interest between shareholders and managers. However, due to the nature of stock options, the value to the option holder increases when the volatility of the underlying stock rises. Unfortunately, the decisions that affect the expected future cash flows of the firm still remain under the control of executives. Using a pooled least squares regression on a sample of 30 PHISIX firms from the period 1998 to 2001, we find that the presence of executive stock option plans significantly affects the volatility of the firm’s stock return.

UP-School of Economics
Authors Keywords
Ang, Clifford; Borja, Daniel Vincent H.; agency costs; stock options; stock price volatility;
Download PDF Number of Downloads
Published in 2003 and available in the UPSE library or NO PDF AVAILABLE Downloaded 0 times since November 25, 2011
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