Summary
This paper examines the productivity effect of the adoption of executive and broad-based stock options. The findings include a positive impact on productivity after the introduction of both executive and broad-based stock options. This productivity effect is maintained over a five-year period after adoption for executive plans but the effect diminishes for broad-based plans. We interpret these findings as evidence of stock option usage as being a benefit to organizations; however, firms may need to distribute broad-based stock options in the same way for executive plans to maintain the impact.
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