English (United Kingdom)

https://curated-unify.zendy.io/wp-json/zendy-region/v1/featured_content/oa?rat=en

https://curated-unify.zendy.io/wp-json/zendy-region/v1/highlighted_journal/

Global: Zendy Plus annual

Presents the access of premium content as premium feature

Premium Content

Presents the keyphrase highlighting as premium feature

Keyphrase Highlighting

Presents the summarisation as premium feature

Summarisation

Insights

Presents the pdf analysis as premium feature

PDF Analysis

Presents the zaia usage as premium feature

ZAIA

Global: Zendy Tools annual

Global: Zendy Free Plan

Global: Zendy Tools monthly

Global: Zendy Plus monthly

In this paper, we use a continuous-time contingent claims framework to study managers’ incentives to cheat in the presence of equity-based compensation policies. When we consider a fully predictable legal process, we observe that managers will always have incentives to engage in illicit activities. The exercise of the option to cheat will be postponed if the corruption costs or if the manager’s reputational loss increases.We further show that managers incentives to cheat are delayed and can even be eliminated when the legal settlement date is nonpredictable. An important result is that managers will always cheat sooner with stock options than with a cash equivalent remuneration consisting of stocks. Finally, we propose a new remuneration package that consists of both long calls and short puts written on the firm ’s stocks in order to reduce managers incentives to cheat. JEL Classification: G13, G30

Stock Options and Managers' Incentives to Cheat