Introduction -- Research conceptual framework -- Research Design and Methodology -- Data Analysis: Structure Equation Modeling (SEM) -- Results: Western expatriate managers -- Results: Chinese managers -- Discussion and Conclusion.

We derive a simple formula for the cost of the ESO to the firm at the grant date under the assumption that the executive has a constant market-to-strike multiple. The market-to-strike multiple is defined as the ratio of the market price on exercise to the strike price of the ESO. The expected...