How Employees Value (Often Incorrectly) Their Stock Options

Given recent increases in the use of stock options by both “new economy” and “old economy” companies one might reasonably expect that employees – the beneficiaries of this perk - understand how options work. But according to recent research by Wharton professors David Larcker and Richard Lambert employees tend to be relatively uninformed as to the basic economics of stock options a finding that has important implications for employers boards of directors and management consultants.

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