Valuing Employee Stock Options: Implications for the Implementation of NZ IFRS 2
dc.contributor.author | Boyle, Glenn | |
dc.contributor.author | Clyne, Stefan | |
dc.contributor.author | Roberts, Helen | |
dc.date.accessioned | 2015-02-11T21:38:41Z | |
dc.date.accessioned | 2022-07-06T22:34:35Z | |
dc.date.available | 2015-02-11T21:38:41Z | |
dc.date.available | 2022-07-06T22:34:35Z | |
dc.date.copyright | 15/07/2005 | |
dc.date.issued | 2005 | |
dc.description.abstract | From 2007 New Zealand firms must report the cost of granting employee stock options (ESOs). Market-based option pricing models assume that options are continuously tradable and thus that option holders are indifferent to the specific risk of the firm. ESOs by contrast cannot be traded and so their cost depends on the risk aversion and under-diversification characteristics of the recipient. Using hypothetical ESOs we show that ESO cost is extremely sensitive to employee characteristics thereby casting doubt on the usefulness of any market-based model. Incorporating early exercise in the latter does nothing to resolve this problem because the optimal exercise policy is itself dependent on holder characteristics which are typically unobservable. Vesting restrictions help reduce the magnitude of error. | en_NZ |
dc.format | en_NZ | |
dc.identifier.uri | https://ir.wgtn.ac.nz/handle/123456789/18949 | |
dc.language.iso | en_NZ | |
dc.publisher | Te Herenga Waka—Victoria University of Wellington | en_NZ |
dc.rights | Permission to publish research outputs of the New Zealand Institute for the Study of Competition and Regulation has been granted to the Victoria University of Wellington Library. Refer to the permission letter in record: https://ir.wgtn.ac.nz/handle/123456789/18870 | en_NZ |
dc.title | Valuing Employee Stock Options: Implications for the Implementation of NZ IFRS 2 | en_NZ |
dc.type | Text | en_NZ |
vuwschema.contributor.unit | New Zealand Institute for the Study of Competition and Regulation | en_NZ |
vuwschema.contributor.unit | Victoria Business School: Orauariki | en_NZ |
vuwschema.subject.anzsrcfor | 149999 Economics not elsewhere classified | en_NZ |
vuwschema.subject.anzsrcforV2 | 389999 Other economics not elsewhere classified | en_NZ |
vuwschema.type.vuw | Working or Occasional Paper | en_NZ |