Stock Options and Managerial Incentives for Risk-Taking : Evidence from FAS 123 R

  title={Stock Options and Managerial Incentives for Risk-Taking : Evidence from FAS 123 R},
  author={Rachel M. Hayes Michael Lemmon Mingming Qiu},
We provide new evidence on the relationship between option-based compensation and risktaking behavior by exploiting the change in the accounting treatment of stock options following the adoption of FAS 123R in 2005. The implementation of FAS 123R represents an exogenous change in the accounting benefits of stock options that has no effect on the economic costs and benefits of options for providing managerial incentives. Our results do not support the view that the convexity inherent in option… CONTINUE READING
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