Where Are the Risks Now? The sensitivity of stock options' payoff to return volatility, or vega, provides risk-averse CEOs with an incentive to increase their firms' risk more by increasing systematic rather than idiosyncratic risk. Researchers using text-mining techniques and other analysis have already come up with indicators of how positive or negative the reviews are. Ghose and his colleagues looked at the sales and reviews of digital cameras and camcorders on Amazon, focusing on those product features most frequently discussed by consumers rather than the product descriptions provided by manufacturers. Amazon, according to Ghose, is aware of their work, as are several startups. As marketers try to establish a more emotional connection with customers, and recession-weary consumers seek products that provide brief moments of pleasure, a clearer definition of happiness is becoming more important to the business world, Mogilner says.

Executive stock options, differential risk-taking incentives, and firm value Unlike an increase in total risk, which can result in a decrease in an executive's subjective value of his options for certain combinations of risk aversion and firm risk (as noted by Lambert et al.

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Volume 104, Issue 1

In our paper, Executive Stock Options, Differential Risk-Taking Incentives, and Firm Value, forthcoming in the Journal of Financial Economics, we examine how executive stock options (ESOs) give chief executive officers (CEOs) differential incentives to alter their firms’ systematic and idiosyncratic personalbank.cf ESOs give CEOs incentives to alter their firms’ risk profile through both their. Keywords: Equity Incentives, Stock Options, Firm Value, Systematic and Idiosyncratic Risk, Risk-Taking Incentives, Executive Compensation Suggested Citation: Suggested Citation Armstrong, Chris and Vashishtha, Rahul, Executive Stock Options, Differential Risk-Taking Incentives, and Firm Value . Executive Stock Options, Differential Risk-Taking Incentives, and Firm Value Christopher S. Armstrong [email protected] Rahul Vashishtha [email protected] This paper examines how executive stock options (ESOs) give chief executive officers (CEOs) differential incentives to alter their firms’ systematic and idiosyncratic.