Pré-Publication, Document De Travail Année : 2023

Information, Insider Trading, Executive Reload Stock Options, Incentives, and Regulation

David B Colwell
  • Fonction : Auteur
  • PersonId : 1259135
David Feldman
  • Fonction : Auteur
  • PersonId : 1259136
Wei Hu
  • Fonction : Auteur
  • PersonId : 1259137

Résumé

We introduce a theoretical model of executives with insider information (insider-executives) granted incentivizing executive stock options (ESO). We show that while insider-executives optimize their wealth, using their insider information nullies ESO incentives, misaligning their and shareholders' interests. We oer realigning methods: granting insider-executives reload stock options (RSO) and imposing blackout trading periods (blackouts). Eective blackouts keep insider-executives incentivized without being overly restrictive, i.e., without reducing their welfare below that of outsiders. We introduce RSO pricing for insider-executives and oer policy implications: reestablishing the currently out-of-favor RSO, and allowing rms, not regulators, to set blackout periods on securities they issue.

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hal-04116818 , version 1 (05-06-2023)

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  • HAL Id : hal-04116818 , version 1

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David B Colwell, David Feldman, Wei Hu, Monique Pontier. Information, Insider Trading, Executive Reload Stock Options, Incentives, and Regulation. 2023. ⟨hal-04116818⟩
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