Abstract
This paper develops a continuous-time real options’ pricing model to study managers’ incentives to cheat in the presence of equity-based compensation plans. It shows that managers’ incentives to cheat are strongly influenced by the efficiency of the justice. The model’s main result is that managers have greater incentives to commit fraudulent actions under stock options than under common stocks based compensation plans.
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Chesney, M., Gibson, R. Stock options and managers’ incentives to cheat. Rev Deriv Res 11, 41–59 (2008). https://doi.org/10.1007/s11147-008-9023-0
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DOI: https://doi.org/10.1007/s11147-008-9023-0