Shedding light on the aim of stock options: a literature review

Abstract

Stock options (hereafter SOs) have been extensively investigated by the literature. The debate has been mainly grounded in the agency theory that has interpreted these tools as mechanisms to align the conflicting interests of managers and owners towards the shareholder value maximization. However, the latest empirical evidence suggests that SOs are often used by opportunistic managers to extract rents to the detriment of shareholders. In addition, literature identifies the perceived cost as a further theoretical lens to interpret the use of SOs. Despite the growing interest around the topic, the research is still fragmented and fails to present a comprehensive picture on the factors that affect the aim of SOs. Our literature review attempts to fill this gap by providing a systematization of the studies on the topic. The paper concludes by presenting the theoretical and practical implications of the study and suggesting directions for future researc

Clinical leadership and hospital performance: assessing the evidence base

“…To identify the relevant articles, we have focused on scientific papers published in English in both peer-reviewed international journals and conference proceedings. This is a standard practice in literature reviews since these sources are considered ‘certified knowledge’ which enhances the reliability of the analysis [ 26 ]. We have not imposed time constraints on the search process to be able to capture all relevant contributions until June 2015 (Fig.…”

“…We searched for all papers whose title, publication, abstract and keywords included at least a string belonging to one of the two selected sets. We have opted for this database because it is considered the largest, most commonly used and generally accepted source for literature reviews [ 26 , 27 ]. After removing potentially duplicated articles, the search returned 253 papers.…”

“…Following a standard approach in systematic literature reviews [ 26 , 27 ], we have analysed and classified the selected papers according to the following criteria: research settings, type of organisation, type of analysis, sample size, leadership position, performance dimension, performance proxy, and effect of clinical leadership on organisational performance. Finally, in order to better interpret the findings of the studies included in the final sample and to fully understand the explanations provided for the reported results, a thematic mapping of the articles was carried out [ 24 ].…”

Alignment vs rent-extraction effects of stock options. A conceptual model

“…As highlighted in our analysis of the literature, studies have mainly explored the effects of these equity incentive tools in terms of alignment (Holmstrom and Costa, 1986; Jensen and Murphy, 1990; Zattoni and Minichilli, 2009) and rent-extraction (Bebchuk and Fried, 2003, 2006; Bebchuk et al , 2002; Melis et al , 2012). Nevertheless, limited attention has been paid to the factors that drive these outcomes well as to the way they are measured (Catuogno et al , 2016; Zattoni, 2007).…”

“…Literature exploring SOs through the theoretical lenses of optimal contracting and rent-extraction views is extensive. However, less attention has been paid to the relationship between determinants and proxies of both the alignment and the rent-extraction effects of SOs (Catuogno et al , 2016; Zattoni, 2007). Stemming from the review and the classification of 202 studies published in international academic journals on the topic, our paper aims to fill this gap by examining: factors that lead to the alignment and the rent-extraction outcomes of executive SOs; how the aim of these compensation tools is affected by the above-mentioned factors; and how aligning and rent-extracting outcomes of executive SOs are measured. …”