Stock Option "Overhang" And Stock Price Volatility

Marshall, Jeffrey
March 2001
Financial Executive;Mar/Apr2001, Vol. 17 Issue 2, p12
Academic Journal
The article presents the results of a study by financial research firm Watson Wyatt Worldwide on stock price volatility and stock overhang. Overhang is the total number of options as a percentage of total number of shares. According to Ira Kay, national director of compensation consulting at Watson Wyatt, the higher overhang levels increase stock price volatility. Executives with large stock options have an incentive to undertake riskier strategies, which can contribute to higher volatility.


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