We thank Anup Agrawal, Brandon Cline, Doug Cook, Junsoo Lee, Gregory Nagel, Mary Stone, Pengcheng Zhu, and an anonymous referee for comments on prior drafts. We also thank Ron Masulis, Harold Mulherin, Vikram Nanda, and David Yermack for helpful conversations. Remaining errors are our own.
Exercises of Executive Stock Options on the Vesting Date
Version of Record online: 16 SEP 2010
© 2010 Financial Management Association International
Volume 39, Issue 3, pages 1097–1126, Autumn 2010
How to Cite
Fu, X. and Ligon, J. A. (2010), Exercises of Executive Stock Options on the Vesting Date. Financial Management, 39: 1097–1126. doi: 10.1111/j.1755-053X.2010.01105.x
- Issue online: 16 SEP 2010
- Version of Record online: 16 SEP 2010
We investigate the motives for executives to exercise executive stock options on the options’ vesting date versus a later early exercise. We find that executives frequently exercise on the vesting date, executives with a greater need for portfolio diversification and riskier underlying stocks are more likely to exercise their options on the vesting date versus a later early exercise, and private information appears less relevant to vesting date exercises.