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?
 
 
Research
 
Case Studies
 
Courses
 
 
Stock compensation glossary
 
Compensation links
 
Securities law links
 
Tax links
 
 
Office hours and location
 
Facts About The School
 
Home | Previous | Next | Huddart Site Map

Psychological factors and stock option exercise


Chip Heath, Steven Huddart, and Mark Lang

We investigate "stock option" exercise decisions by over 50,000 employees at seven corporations. Controlling for economic factors, psychological factors influence Exercise. Consistent with psychological models of beliefs, employees exercise in response to stock price trends---exercise is positively related to stock returns during the preceding month and negatively related to returns over longer horizons. Consistent with psychological models of values that include reference points, employee exercise activity doubles when the stock price exceeds the maximum price attained during the previous year.

JEL Classification: D81 J33 M12

Keywords: risk aversion, compensation, prospect theory, valuation, decision heuristics, reference points

Quarterly Journal of Economics Volume 114, Number 2 (May 1999) 601-627

Download a pre-publication version of the paper from SSRN.

With a subscription, download a copy of the paper published paper from Ingenta Select.


Steven Huddart
Smeal College of Business, Penn State University, University Park, PA 16802-3603 USA
(814) 863-0048
huddart@psu.edu
vCard
Home | Previous | Next | Huddart Site Map

http://personal.psu.edu/sjh11/Abstracts/ReferencePoints.shtml
was last updated on Tue, Aug 21, 2018.
Today is Sun, Sep 22, 2019.

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