Penn State University - Smeal College of Business
PSU search
Student Exchange Smeal site map Contact us Accounting faculty directory

Steven Huddart picture
Should I exercise my stock options?
Case Studies
Stock compensation glossary
Compensation links
Securities law links
Tax links
Office hours and location
Facts About The School
Home | Previous | Next | Huddart Site Map

Employee stock option exercises: an empirical analysis

Steven Huddart and Mark Lang

This paper describes the exercise behavior of over 50,000 employees who hold long-term options on employer stock at eight corporations. Employees typically exercise options years before expiration, commonly sacrificing half of the Black-Scholes value. Exercise is strongly associated with recent stock price movements, the Market-to-strike ratio, proximity to vesting dates, time to maturity, Volatility, and the employee's level within the company. These findings have implications for compensation planners, the FASB as it develops a new accounting standard for options, and financial statement users and preparers who apply and interpret the new FASB standard

Journal of Accounting & Economics Volume 21, Number 1 (February 1996) 5-43

Keywords: management compensation, stock options, exercise policy, valuation.

JEL Classification: G12 J33 M41

Steven Huddart
Smeal College of Business, Penn State University, University Park, PA 16802-3603 USA
(814) 863-0048
Home | Previous | Next | Huddart Site Map
was last updated on Tue, Aug 21, 2018.
Today is Tue, Sep 29, 2020.

Unless otherwise noted, all material is:
Copyright ©1995-2018 Steven Huddart. All rights reserved.