Employee Stock Options, Financing Constraints, and Real Investment: Theory and Evidence
نویسندگان
چکیده
منابع مشابه
Employee Stock Options, Financing Constraints, and Real Investment
Exercises of employee stock options generate substantial cash inows to the rm. In our model, these cash inows are correlated with improvements in the rms investment opportunities and thus allow rms to relax nancing constraints in those states of the world where the demand for investment is high. Using a regression discontinuity approach, we estimate that rms increase investment by betwe...
متن کاملEmployee Stock Options, Financing Constraints, and Real Investment: Theory and Evidence
In this paper, we demonstrate the advantage of the use of broad-based stock option plans over cash compensation when the rm needs to nance both current and future investment in an environment where external nance is costly. Intuitively, the company obtains funds for investment in the current period by cutting xed wages through the issuance of stock options. The company receives additional f...
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We review and extend recent contingent claims models of capital structure. We focus on two models with analytic formulas in perpetual horizonLeland (1994) and Mauer and Sarkar (2004). We implement the investment option in both models in finite horizon with a numerical lattice while maintaining the analytic structure for the capital structure decisions in the second stage by maintaining the perp...
متن کاملInvestment Options with Debt Financing Constraints
Building on the Mauer and Sarker (2005) model that captures both investment flexibility and optimal capital structure and risky debt, we study the impact of debt financing constraints on firm value, the optimal timing of investment and other important variables like the credit spreads. The importance of debt financing constraints on firm value and investment policy depends largely on the relati...
متن کاملHeterogeneous beliefs and employee stock options;
This paper uses a market valuation model to explore why firms grant employee stock options. When insider managers and outside investors have different opinions about the future prospects of the firm, employee stock options can be used to capture future investor overvaluation and to save employee compensation costs. Options can enhance the stock value for existing shareholders if the difference ...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2008
ISSN: 1556-5068
DOI: 10.2139/ssrn.1101292