Options can induce risk taking for arbitrary preferences

Economic Theory

Volumn 27, Issue 3, 2006, Pages 513-522

  Braido, Luis H B ^a   Ferreira, Daniel ^b  

^a FUNDAÇÃO GETÚLIO VARGAS   (Brazil)

^b STOCKHOLM SCHOOL OF ECONOMICS   (Sweden)

Author keywords

Risk taking; Stochastic dominance; Stock options

Indexed keywords

EID: 18244377389     PISSN: 09382259     EISSN: None     Source Type: Journal    
DOI: 10.1007/s00199-004-0581-6     Document Type: Article

References (5)

1. Carpenter, J.N. (2000) Does option compensation increase managerial risk appetite? Journal of Finance 55, 2311-2331
2. DeFusco, R.A., Johnson, R.R., Zorn, T.S. (1990) The effect of executive stock option plans on stockholders and bondholders. Journal of Finance 45, 617-627
3. Lewellen, K. (2002) Financing decisions when managers are risk averse. Mimeo, University of Rochester
4. Ross, S.A. (2004) Compensation, incentives, and the duality of risk aversion and riskiness. Journal of Finance 59, 207-225
5. Smith, C.W., Stulz, R. (1985) The determinants of firms' hedging policies. Journal of Financial and Quantitative Analysis 20, 391-405