Open AccessEquity-based incentives: wealth transfers, disruption costs and new models
Author(s) -
Michael C. I. Nwogugu
Publication year - 2007
Publication title -
corporate ownership and control
Language(s) - English
Resource type - Journals
eISSN - 1810-0368
pISSN - 1727-9232
DOI - 10.22495/cocv5i1c2p5
Subject(s) - incentive , equity (law) , equity risk , business , volatility (finance) , equity capital markets , financial economics , economics , finance , microeconomics , public economics , private equity , political science , law
This article seeks to: a) introduce new models of incentives, including those that completely solve the problems of “Back-dating” and “Re-pricing” of employee stock options and equity-based incentives; b) introduce new theories of unwarranted wealth-transfers and Disruption Costs inherent in the use of Equity-based Incentives (“EBIs”). Several recent detailed studies found that there is widespread ESO/EBI-related fraud and non-compliance, which could have damaging effects on public confidence in financial systems and increase market volatility.