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Managerial Stock Options and the Hedging Premium
Author(s) -
Hagelin Niclas,
Holmén Martin,
Knopf John D.,
Pramborg Bengt
Publication year - 2007
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/j.1468-036x.2007.00380.x
Subject(s) - incentive , enterprise value , value premium , value (mathematics) , stock (firearms) , financial economics , stock options , economics , business , microeconomics , monetary economics , finance , capital asset pricing model , mechanical engineering , machine learning , computer science , engineering
Previous studies have found mixed evidence on whether hedging increases firm value. Some studies have shown that managerial incentives may influence firm hedging. In this paper we provide evidence that when hedging is based upon incentives from managers' options, firm value decreases.