Purpose – Firms will, at times, replace employee holdings of out-of-the-money stock options with new ones that have lower exercise prices. This paper seeks to examine how stockholders view such actions. Design/methodology/approach – The stock price reaction to announcements of option...

Purpose – Firms will, at times, replace employee holdings of out‐of‐the‐money stock options with new ones that have lower exercise prices. This paper seeks to examine how stockholders view such actions. Design/methodology/approach – The stock price reaction to announcements of option...