Zero-cost collars and equity swaps provide insiders with the opportunity to hedge the risk associated with their personal holdings in the company's equity. Consequently their use has important implications for incentive-based contracting and for understanding insider-trading behavior. Our...

Employee stock options (ESOs) are nontransferable and employees are generally not well diversified compared to outside shareholders. These features of ESOs imply that employee option holders may optimally exercise their options significantly early relative to what would be expected for ordinary...

We provide an examination of the use of zero-cost collars and equity swaps by corporate insiders to hedge the risk associated with their personal holdings in the company's equity. These financial instruments have important implications for insider trading and incentive-based contracts. Our...

The usage of performance-vesting (p-v) equity awards to top executives in large U.S. companies has grown from 20 to 70 percent from 1998 to 2012. We measure the effects of p-v provisions on value, delta, and vega of equity-based compensation. We find large differences in the value of p-v awards...

This paper provides the first systematic examination of policies and procedures put in place by corporations to regulate trading in the stock by the firm's own insiders. Over 90 percent of oursample companies have their own policy restricting trading by insiders, and nearly 80 percent have...

Using data that includes specific contractual details of Relative Performance Evaluation (RPE) contracts granted to executives for 1,833 firms for the period 1998 to 2012, we develop new methods to characterize RPE awards and measure their value and incentive properties. The frequency in the use...