We report that the probability that executives exercise options early decreases with the volatility of the underlying stock return. We interpret this to mean that executives' subjective option value increases with volatility and that option grants increase executives' risk appetite. Further...

Recently, a significant number of companies have come under public and regulatory scrutiny for backdating stock option grants. This article discusses factors that influenced the dramatic increase in stock option compensation and summarizes the academic research that led to the discovery of...