What determines how top managers value their executive stock options? We explore this question empirically by using a unique survey data set which combines subjective option valuation data with a wide set of individual-level variables. In contrast to theoretical predictions, individuals in our...

We argue that stronger debt enforcement in bankruptcy can reduce indirect costs of financial distress: (i) by increasing the likelihood of restructuring outside bankruptcy and (ii) by improving the recovery rate of stakeholders, such as trade creditors, through explicit legal provisions....

We analyze the internal capital markets of a multinational conglomerate, using a unique panel data set of planned and actual allocations to business units and a survey of unit CEOs. Following cash windfalls, more powerful managers obtain larger allocations and increase investment substantially...

We use unique and proprietary data to investigate the design of executive stock option (ESO) contracts of large European firms. We document a large heterogeneity in the ESO plan design. We then construct a score of the CEO friendliness of the plan design and study the relationship between this...

We empirically investigate the effect of financial distress on corporate ownership and control. Our analysis is based on a panel of 267 German firms that suffered from repeated interest coverage shortfalls between 1996 and 2004. We track each firm's development over the distress cycle with...

We investigate debt restructurings in Germany for a sample of 116 financially distressed companies. About half of the firms succeed in restructuring their debt in a workout while the others file for bankruptcy. Our evidence suggests that firms which have higher leverage, owe more debt to banks,...

We use unique data to empirically analyse the behavior of senior managers in a distinct stock option plan. Combining individual-level exercise data with very detailed questionnaire data, we study how these managers exercise their stock options. Moreover, we investigate which rational and...

What determines how top managers value their executive stock options? We explore this question empirically by using a unique survey data set which combines subjective option valuation data with a wide set of individual-level variables. Inconsistent with the predictions of theory, individuals in...

This paper investigates the link between option repricing, firm performance and corporate governance in Europe. Our sample consists of 77 European firms that repriced their stock option between 1987 and 2003. We document that option repricing is mainly a phenomenon for young and fast growing...

Investors and academics increasingly criticize that various design features of executive stock option (ESO) plans reflect self-dealing by managers and the inability of corporate governance mechanisms in monitoring executives (managerial power hypothesis). We use a unique and not publicly...